Financial services group Countrywide Assured is to build up its estate agency business through a tie-up with Friends Provident, it said today.
The group, which already owns the UK’s largest estate agency chain, Bairstow Eves, will acquire the life assurer’s 104 agency sites for £21m.
In return, Countrywide has agreed to sell Friends’ range of life assurance products through its own branch network over the next 15 years.
Speculation about a deal between the two groups has grown in recent months and Countrywide admitted it was in talks with “third parties” in May.
The group, based in Witham, Essex, has seen profits surge in the past year as it benefits from the buoyant house market.
Results today showed pretax profits soared 56% in the six months to 30 June to £35.8m on growth in its estate agency and financial services arms.
Turnover in Countrywide’s estate agency division in the first half rose 20% to £110.5m on record levels of new business.
Managing director Harry Hill said: “We are delighted to enhance our core estate agency network with the addition of 104 Friends Provident agencies.
“The acquisition strengthens our position as the UK’s leading estate agency network and a major distributor of mortgage and life assurance.”
Friends’ estate agency network includes brands such as Fulfords, Carson & Company and Palmer Snell in the south of England.
Under the agreement to sell Friends’ life assurance products, Countrywide will no longer write new mortgage-related life assurance business of its own.
Countrywide said the distribution deal should generate payments of around £275m over the next 15 years, with an upfront payment of £25m.
Friends said the tie-up reflected its desire to grow its share of the life and pensions market and work with “key strategic partners”.
Countrywide has around 186,000 mortgage clients and Friends believes the agreement will be earnings-enhancing from next year.
Group chairman Christopher Sporborg said Countrywide had been in talks with Friends for the past five months.
He added that given the group’s performance in the first half, “I would be disappointed if we didn’t exceed initial expectations for the full-year”.
Profits in Countrywide’s estate agency division rose by 146% to £15.5m in the first half as the group took market share from its rivals.
Record sales of mortgages and life products saw profits in financial services surge 83% to £3.3m.
Sporborg said the recent stock market volatility had led some policyholders to cash in their policies half-way through their life cycle.
But he added the housing market was likely to remain strong in the coming months despite fears of a slowdown.
He said: “The froth has come off the top and the price increases are slowing but we do not see a huge black hole appearing – the fundamentals remain strong.”
Shareholders will receive an interim dividend of 2.05p per share, up 17%.
The group’s shares were up 2.5p at 155p in early trading.
EGi News 22/08/02
