MEMBERS of Engage Mutual and Family Investments have voted in favour of a merger that will create one of the UK’s largest mutual insurers.
The move will see Engage’s £900m in assets and 500,000 members join with those of its larger rival, which has £4.9bn assets under management and more than two million members.
It is expected the combined value of assets will be in excess of £6bn at the end of the 2014 financial year.
The merger may result in the closure of Engage’s Harrogate office, which currently employs around 200 people.
Family Investment’s Brighton office will become the head office of the newly-formed business when it opens next year.
Under the merger proposals, there is only a two year commitment to maintain a Yorkshire office. The process is expected to take three years to complete.
Last month, the mutuals confirmed there would be job losses if the proposals were approved.
The plans required backing from more than 75 per cent of both Engage and Family’s voting members.
Of the 30,000 Engage members that voted, 95 per cent backed the merger. Similarly, Family Investments saw 95 per cent of its 44,000 members who voted approve the move.
Engage Mutual’s chairman Christina McComb said the board was delighted that members had recognised the move “really is in their long term best interests”.
Ms McComb is to head the board of the joint business, while Family Investments chief executive Simon Markey will continue his role in the new organisation.
Peter Burrows, currently chief executive at Engage, is in line for the chief financial officer title.
Mr Burrows told The Yorkshire Post that Engage had stressed the positives of the merger to members, including a broader range of benefits and “efficiencies of scale” that will provide greater security.
“Ultimately it was the decision of our members,” he added.
The new organisation is expected to open its doors for business on April 1 2015, subject to regulatory approval.
Mr Burrows said he could not comment further on job losses, but that “there will be an impact” on the Harrogate office and Family’s Brighton operation.
“Our two organisations will continue to work to define what the right balance is for the new organisation,” he said.
An announcement is expected early next year on a revised structure.
The businesses are also working on a new brand that “reflects the heritage” of both mutuals.
The merger comes as other small mutuals praised the current strength of the sector.
Sheffield Mutual said 2014 has been an “exceptional” year, despite the Retail Distribution Review (RDR) forcing changes in its operating model.
Business development manager Dawn Gregory said the organisation is now attracting business from further afield, having been primarily a Yorkshire-based mutual.
She said: “We used to receive about 80 per cent of our business from advisers, that’s now changed to 50 per cent advisers and 50 per cent direct.
“We’ve had a phenomenal year and we’ve got the right business mix.
“I see no concerns for the mutual sector going forward. If anything, we’re getting stronger.”
Ecology Building Society, a Keighley-based mutual, has also seen record performance this year.
Chief executive Paul Ellis said: “A large driver for us is mortgages; in that area we’ve seen record gross lending, record net lending and a record pipeline of lending.
“All of that is within our stated aims of lending for environmental impact.”
The regional and national mutual sector “is in very good shape”, he added.
Mr Ellis backed the Engage Mutual and Family Investments merger, saying the two organisations will “hopefully be stronger together”.
He told The Yorkshire Post: “The friendly society market is quite tough, but I think the announcement of the tie-up with Family is quite positive.
“We’ve had a relationship with Family in the past and both Engage and Family are two of the friendly societies we’d be prepared to do business with. I don’t think it’s necessarily a sign of weakness.”
It was “sad” Engage had not been able to maintain its independence, he added.