INSURANCE GIANT Aviva agreed the terms of a £5.6bn takeover of rival Friends Life, but refused to be drawn on the likely fallout in job losses.
Mark Wilson, the chief executive of Aviva, also declined to discuss the future of the York headquarters of the life business, which employs 2,000 people.
He told The Yorkshire Post: “When you put two large organisations together you would expect there to be some impact on job numbers.
“We have quite some time to go as we analyse this. I am not going to be giving any numbers today.”
Asked about the future of the York office, Mr Wilson said: “I’m not going to speculate on any location around the country today because there’s a whole lot of work to be done.”
The two businesses have a combined headcount of 15,000. Analysts have speculated that 2,000 jobs could go.
They have also suggested that Friends Life could close its London office.
Aviva said the merger creates a market leader with 16m life insurance customers. It is expected to generate £600m in excess cash flow a year and about £225m in annual cost savings by the end of 2017.
Andy Briggs, current group chief executive of Friends Life, will become CEO of Aviva UK Life, displacing incumbent David Barral, with Mr Wilson continuing as CEO of the enlarged Aviva Group.
Mr Wilson described the deal as “one of those rare transactions where two organisations can fit together with almost surgical precision”.
He said: “We believe it enhances each other’s strengths and addresses each other’s challenges.
“We believe this transaction is financially and strategically compelling for both’s shareholders.”
Pension providers are rushing to revise their product ranges after the Government removed obligations for people to buy an annuity, or income for life, at retirement, hurting sales.
Mr Wilson said the combined business would serve one in four British households or “just under four times the population of New Zealand”, where he was born.
Andy Briggs said the enlarged group would offer superior back book management, scale and cost advantages, scale leadership positions and improved customer propositions.
Mr Wilson said synergies would come from bringing in-house fund management services, savings on systems and job losses where there is duplication.
Aviva hired the Kiwi from Asian rival AIA two years ago to turn around the general and life insurer.
Mr Wilson has restructured the group by selling off businesses and cutting costs.
He said: “When you do a turnaround it’s very easy to look at a company and say what needs to be done. The hard part is getting people to do it.”
Analysts said the cost savings from the Aviva and Friends Life combination were higher than expected but would take several years to be achieved.
The merger has the backing of Clive Cowdery, who founded Friends Life in 2008 when it was known as Resolution.
The group can trace its roots back to the 1800s as the Sun Life Assurance Society, formed in 1810, and Friends Provident, which was founded in Yorkshire in 1832. The Friends name is likely to be lost through a rebrand under Aviva.
Aviva is the product of a 2000 merger between CGU and Norwich Union. It is one of Yorkshire’s largest private sector employers with 3,500 staff in York and Sheffield
An Aviva spokeswoman said the group is keen to retain Mr Barral following the merger.