CGNU Exits Equitable Bidding – Eureko Set To Enter

November 13, 2000

With the fast approaching Nov. 20 cutoff date for bids to acquire Equitable Life, the U.K.’s oldest mutual life insurer, it appeared that only one company, the U.K.’s Prudential, remained in the running. Its main rival, CGNU, apparently pulled out of the bidding over the weekend. Meanwhile, Eureko, a Pan-European insurance group now seems poised to enter the auction.

Equitable is being sold, as it cannot meet court imposed obligations to continue guaranteed annuity payments to policy holders totaling an estimated £1.5 billion $(2.16 billion). There are fears that these amounts could increase substantially, with some estimates indicating it could go as high as £5 billion ($7.2 billion).

CGNU’s exit left Prudential as the only contender, and would have assumedly lowered the price it might offer.

Eureko, Europe’s 5th largest insurance group, is an independent venture owned by the U.K.’s Friends Provident, Holland’s Achmea, Portugal’s Banco Comercial Portugues, Sweden’s LF Group, France’s MAAF, Germany’s Parion, SwissMobilar, and Denmark’s Topdanmark. It announced plans in July for an initial public offering of its shares.

According to a report in the Financial Times, Eureko is considering making a formal bid for Equitable as early as next week, and would merge the company into its U.K. component Friends Provident, continuing its operations. Prudential has said that if its bid is successful, it would simply incorporate Equitable’s business into its own operations.

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