Fidelity acquires Lumley Life's NZ book

Friday 7th May 2004

Fidelity Life is to pick up the Lumley Life book in New Zealand - subject to court approval.

Milton Jennings, chief executive of the New Zealand owned Fidelity, confirmed the deal was worked through in the past few days and the contract should be signed next week.

He says it is subject to court approval because Fidelity is not buying any shares in the company, only the around 3,500 policies that are in the Lumley name. The court has to be convinced that the transfer of those policies is in the interests of the policy holders.

Jennings says he has no doubt the policy holders will be as delighted as the former Lumley Life advisers were when they were told on Friday.

"This will be their (the policies') fourth owner in a year," he says. " We will keep hold of them."

Lumley Life UK sold off its Australasian business to Wesfarmers, which tucked the fire and general business into its own then flicked the life part on to PrefSure, the Australian arm of South Africa's Capital Alliance.

When PrefSure decided it didn't want the New Zealand business, Jennings says the company's representatives arrived at Fidelity's door.

"They didn't really want one of their competitors with business in Australia to have it," he says. "We found out (during due diligence) a lot about their business - wording, systems and pricing. I feel we got a good deal."

He also discovered that Lumley's commission structure worked on a spread commission basis with most only paid 75% up front.

"The advisers were trying to build up a renewals stream rather than trying to sell a product," Jennings says. "We will honour all those renewals. This will give them stability."

Jennings won't say how much the Lumley book is costing Fidelity - its first acquisition in its 31 year history - but he says the mainly whole of life, TPD and disabilities policies have a combined annual premium of around $4.5 million.

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