Legal and General in Pounds 285m Nationwide Deal

LEGAL & General is to buy Nationwide's insurance and investment businesses in a deal that will also see the group sell its products through the society's high street advisers.

L&G hopes to complete the takeover of Nationwide Life and Nationwide Unit Trust Managers in the summer for an as yet undetermined sum, although the businesses were valued at pounds 285m in March last year.

The insurance giant will also distribute dual-branded life insurance, pensions and investment products through Nationwide's 860- strong branch network and 2,000 high street advisers - a tie-up that could add 10% to L&G's life assurance business sales.

Nationwide confirmed that 250 staff employed within the two businesses will transfer to L&G and continue working out of their office in Swindon, while about 20 staff will switch to other areas of the society's business.

The deal is not exclusive, and Nationwide will continue to sell AXA whole of life investment plans and Norwich Union income protection policies, as well as home and car insurance from UKI and Mondial travel insurance.

But Nationwide said it was not aiming for a multi-tie arrangement and would "primarily" sell only L&G pensions, insurance and investment products.

Graham Beale, chief executive designate of Nationwide, said: "Legal & General specialise in the creation of insurance and investment products and we are very good at selling - we're sticking to what we're good at."

He added the two businesses being sold, which were launched just over 10 years ago, contributed about pounds 50m a year to the group's pre-tax profits.

Nationwide will receive commission for every L&G product sold, but declined to disclose further details.

The group said existing Nationwide insurance and investment policyholders may be switched on to L&G policies after the deal is completed, but Mr Beale said the society would "preserve the conditions" in their contracts.

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