City sceptical on Britannic hunt
INSURER Britannic has put itself on the marriage market after a slump in its shares and profits. In the language of a Jane Austen novel, Britannic, one of the grand old ladies of the insurance industry, says it 'will entertain sensible propositions' from suitors.
Beaux may include mutual Royal London, which owns 12.1%. Prudential funds hold just under 4%. HBOS, which owns Clerical Medical and the operating assets of Equitable Life, has 3%. Overseas players such as Aussie giant AMP or GE Capital of the US may also be interested in the group, which could command a price of up to £1.5bn.
A deal would mark an end to Britannic's long independent history, dating back to 1886, when it was set up to cater for factory workers.
Chairman Harold Cottam recently gave the group a makeover, aiming to transform it from a dowdy door-to-door seller into a financial supermarket offering flexible mortgages, investments for the retired and an internet channel. The group's life fund is financially sound.
Analysts, however, hinted that the Birmingham-based group, which mislaid chief executive Danny O'Neil in January after only seven weeks in the job, might remain a wallflower. 'It is not clear where bidders will come from,' says Roger Hill of UBS Warburg.
Britannic shares rose 40p to 694p, but are down more than 30% from their 12-month high of 980p. Operating profits last year fell 17% to £145.4m. The group ran up a £223.3m loss before tax, from a profit of £64.4m last time, after share falls wiped £279m off its investments. Dividends rose 2.2% to 55.2p a share. Cottam warned that 2002 dividend growth would slow.
