Life insurance firms Friends Provident and Resolution, which announced plans for an £8.6bn merger in July, have reiterated that IT is at the heart of their planned transformation into Friends Financial and say they plan to push ahead with the deal.
The two companies have also set an expected merger date of 29 November, assuming shareholders back the plan at an extraordinary general meeting earlier that month.
Confirmation of the firms' plans follows a period when the merger looked in some doubt. Insurers Pearl and Standard Life have each expressed an interest in buying Resolution since the prospective deal was first announced, while Friends Provident was rumoured to have been the subject of an informal takeover approach by Zurich Financial.
In a statement today, however, Friends and Resolution said: “A joint integration project has been launched, under which considerable progress has been made in planning the integration of the two businesses.” They said this included “the harmonisation of financial reporting, planning and management information”.
Friends Provident also maintained that it was using technology to strengthen distribution, improve service and reduce costs, and said that its processing capabilities and its eSelect electronic underwriting system put it in a strong position with regard to IT.
Cost savings generated by IT consolidation remain crucial to the merger, and Friends Provident does have a reputation for effectively consolidating the IT systems of companies it has bought in the past.
Under the merger plan, there will initially be limited integration of service platforms to minimise disruption, but all new business will transition to Friends Provident's platforms over time, the companies have said previously.
Friends Provident business will not be outsourced and no material changes will come about to Resolution’s £580m outsourcing agreement with Capita, which is understood to have begun on 1 August.
The insurers have forecast implementation costs of around £120m to integrate IT and finance and asset management, including redundancy costs and policyholder communications.
Now take part in our