Comment: Mutual interests lead to corporate marriage

MANY financial organisations took the stock market shilling in the frantic demutualisation derby of the late 1980s and following decade. It was not always wise, with the likes of Abbey National, Alliance & Leicester, Bradford & Bingley and Northern Rock all falling by the wayside in one way or another through financial overreach and delusions of where their true soul and expertise lay.

Such mutuals bought into the stock market hype without the requisite skills, and came a cropper. However, Scottish Friendly has – mostly under the radar – shown that a mutual can pursue a growth strategy without a publicly-listed quote, and still not rely just on organically generated revenues, but also a robust acquisition policy and providing distribution services to other financial organisations.

The society, now Scotland’s biggest remaining mutual, surfaced again in the M&A market yesterday when it announced the agreed acquisition – dependent on member and regulatory approval – of Marine & General Mutual.

While it is the unglamorous back book of M&GM’s annuity business that is being acquired, it is meaningful in strategic terms, doubling Scottish Friendly’s assets to about £2 billion.

Other takeovers done by the Glasgow-based group since 2007 – ironically, the year a hubristic Northern Rock foundered amid too great a reliance on frozen money markets for funding – have included Scottish Life Legal, Preston Operative, the London, Aberdeen and Northern Mutual Assurance Society, and Royal Standard.

Scottish Friendly said yesterday its acquisition appetite in the sector was not sated, although it seems it is more interested in back book annuity business rather than new custom following George Osborne’s annuity freedom timebomb in the last Budget.

Nice to see a mutual on the confident front foot.

Ryanair flying well even without fuel price fillip

Michael O’Leary’s Ryanair has lifted its profit forecast for the third time in four months, even without the benefits of slumping oil prices. But with some rivals able to take advantage of cut-price fuel bills because they didn’t hedge forward, the pressure on the budget carrier looks set to intensify.