The deal is the company’s largest since it embarked on a takeover spree about a decade ago, which included the acquisition of Scottish Legal Life in October 2007, when more than 500,000 policies and £170 million of assets were transferred.
The mutual, which employs just under 100 people in Glasgow, said it remained on the hunt for more targets following the purchase of M&GM for an undisclosed sum.
Chief executive Fiona McBain said: “We are particularly proud of having secured the opportunity to double in size. The takeover of M&GM will give us additional economies of scale that can drive further efficiencies and increased value to all of our policyholders, including those transferring from M&GM.”
McBain will be head of the enlarged organisation. M&GM chief executive David Gulland, who will depart with his colleagues after completion of the acquisition, said the firm had been looking to secure the long-term future of its customers through a transfer to another organisation.
“This involved a thorough process considering a number of potential operations and we were delighted to select Scottish Friendly,” he said.
All M&GM policyholders will become members of Scottish Friendly as part of the deal, which is expected to complete in the second quarter of the year subject to approval from members, regulators and the High Court.
Scottish Friendly director Neil Lovatt said: “This is a strategic acquisition. We will continue to look at possible other ones. It is all part of our strategy of growing organically, through acquisitions and by business process outsourcing. It is not a case of us stopping after this deal is done.”
The group, which traces its roots back to 1862 when it was known as the City of Glasgow Friendly Society, provides life assurance and investment products, as well as outsourcing services to other financial organisations.
M&GM, Britain’s oldest active registered company, was founded in 1852 as the UK Temperance & General Provident Association at a time when seamen were charged more for life assurance if they were teetotal.
This was because at that time insurance companies considered water to be dangerous and unsanitary. The organisation reinvented itself as MGM Advantage in 2008 with a focus on the pension annuities market.
The company closed to new business in 2013, sold its infrastructure to a new company established by private equity, and adopted the Marine & General Mutual brand. It is essentially a back business book run by five employees at M&GM’s office in Worthing, Sussex, that Scottish Friendly is acquiring.
Lovatt said there would be no Scottish redundancies as a result of the merger, but there would be unspecified cost efficiencies.
He added that the acquisition price was not being disclosed because “it is commercially sensitive and complex”, adding: “We are both mutuals, so there is not a straight payment that goes out.”