Royal London Group, which agreed to buy Co-Operative Bank Plc’s insurance and investment units in 2013, is looking for more deals as the industry moves toward adopting a new capital regime in January.
Chief Executive Officer Phil Loney expects companies to offer for sale insurance businesses no longer open to new clients as they adopt the new regulatory requirements known as Solvency II, that may force them to hold extra capital against some assets.
“We know where all the with-profit books are that are in the market place and they all know we are very much open for business,” said Loney in a telephone interview. “Many of whom in the run up to Solvency II will be finding life tougher and more demanding under the new capital requirements. We think there are likely to be more opportunities.”
Royal London completed the integration of the Co-Op unit in May after agreeing to pay about 219 million pounds ($344 million) in 2013. It also agreed to buy Royal Live Assurance in 2011 which was in run off, or closed to new business, after the financial crisis.
“There are a lot of quite sizeable books of businesses still out there that are in run off,” said Loney. “If suitable opportunities for acquisitions come along, then we are open to them. It’s about boosting our scale and spreading our overheads.”
Royal London, the U.K.’s biggest customer-owned life insurer, reported on Tuesday a 78 percent drop in first-half pretax profit of 30 million pounds after lower gains from investments.
Even so, total new life and pensions business jumped 34 percent to 3.03 billion pounds, boosted by the government’s changes to the retirement system. Total funds under management increased 1 percent to 83.4 billion pounds as of June 30.