The acquisition is still subject to regulatory approvals and payment will comprise £310m in cash receivables and a £30m deferred consideration in the form of preference shares in International Financial Group Limited (IFGL), the owner of RL360°.
“It’s a game changer, it’s big news, there’s no doubt about it,” Kneeshaw said to IA.
Aviva made the decision to sell the business following a strategic review that found that FPI was not central to the group’s strategy.
Chris Wei, executive chairman of Aviva Asia and FPI, said: “The sale of Friends Provident International Limited is a good outcome for Aviva. It allows us to focus on the significant opportunities we have to grow Aviva’s business across Asia through digital and disrupting the traditional insurance industry.”
For sale
Aviva were reported to be looking for a buyer for FPI in March 2017 and Kneeshaw confirmed that talks started a few weeks beforehand. However, RL360° not among those touted as potential acquirers.
“I was as pleased about keeping it out of the news as I was about winning,” Kneeshaw said.
He believes that there was one other interested party that made a bid in the final round but declined to name names.
Loss-making business
While several reports have highlighted the fact that FPI is a ‘loss-making’ business, Kneeshaw is unconcerned.
“I have absolutely no knowledge of Aviva’s accounts or how they account for the things they do, but I’m very relaxed that we’ve bought a business that will be good news.”
Global growth
The acquisition will expand RL360°’s global presence with Singapore and Latin America.
“We will have to build a relationship with the regulator in Singapore but from a structural sense, once completed, we will already have people and products on the ground,” Kneeshaw explained.
There are, however, some areas of overlap; specifically, Dubai and Hong Kong.
“We already have duplication in Hong Kong we’ve already got the old Scottish Provident licence and the Clerical Medical licence. We’re duplicated in the Isle of Man – we’ve already got a duplication of licences and branches there. It’s not uncommon,” Kneeshaw said.
“You can keep the underlying entities separate and run them as one business. That’s what we do with Clerical Medical and the world doesn’t even notice on a day-to-day.”
The acquisition also means that RL360° will obtain an Insurance Authority licence in the UAE.
Plans
RL360°’s experience of acquiring and integrating Scottish Provident and Clerical Medical has given Kneeshaw and the company a roadmap of how to proceed with FPI.
“We’re going to set up a working group under the chairmanship of Denzil Williams, RL360°’s director of infrastructure, which will be made up of people from FPI as well as RL360°.
“We have a base understanding of what both businesses are good at. The group will look at things such as where we should be based, for example in Hong Kong or Dubai, what we should do about brand, IT systems and product overlap. There are a hundred things to look at and discuss but you never really get into the nitty gritty until you’ve completed.
“The work has only just started – this is just the beginning. It’s three to five months to get regulatory approval, mainly Isle of Man and Hong Kong. During that time, you can do a shed load of work – branches, management structure, brand etc.”
For Kneeshaw, it’s important for the people involved in both companies, as well as clients and advisers, to get as much certainty as possible.
“It is important, by the time we own FPI, which may not be for five months, to give people certainty. They like to know who their boss is going to be and what’s their job. If they know that, they can get on with their day-to-day life.
“Likewise, with brand, advisers want to know who they should be dealing with and what the brand is. So, we will need to make those decisions quickly. Other things like integrating IT systems can take two to three years. It’s about doing things in a way that doesn’t upset customers and advisers.”
Isle of Man
“In a world facing more upheaval not less with all the regulatory, cultural and political change; this is a time of great change. And in that time, I’ve felt it’s really important for the Isle of Man that one of the players is an Isle of Man company. We are headquartered there, we still will be, the management teams are all based there.
“I think that’s important for the island. It’s not just the company issue and I think that’s quite exciting for the Isle of Man.”
