New Friends Provident chief tipped to lead £5bn Scottish Widows bid

ANDY Briggs, the outgoing head of general insurance at Lloyds Banking Group, could lead a £5 billion bid for the bank's life and pensions business Scottish Widows when he becomes head of Friends Provident, according to City sources.

Resolution, owner of Friends Provident, surprised the market when it succeeded in poaching Briggs last week.

He will replace current Friends chief Trevor Matthews, who said he planned to return to his native Australia.

Under the helm of chairman Clive Cowdery and chief executive John Tiner, Resolution aims to build a 10bn business by 2013.

The City has long speculated on whether Lloyds would sell Edinburgh-based Scottish Widows, and it would provide a much needed boost to Resolution if Cowdery and Tiner could persuade Lloyds to sell.

It used Friends Provident to take control of three acquisitions, including the 2.75bn purchase of Axa's UK life business and the 102 million deal for Bupa's insurance arm.

Eamonn Flanagan, a director of Shore Capital and one of the UK's top ten stockbroking analysts in the insurance sector, said the arrival of Briggs gave Resolution a "favourable angle" because he was "part and parcel of that (Scottish Widows] business".

He added that Scottish Widows would "without a doubt" be an appealing acquisition for Resolution.

"Scottish Widows is a great company," said Flanagan, who argued that the insurance firm, if acquired, would make Friends Provident into a business of similar scale to Cowdery's previous vehicle, also called Resolution, after it completed its 1.2bn merger with FTSE 100 insurer Britannic in 2005.

"More importantly, Scottish Widows has a terrific with-profits fund that can provide a life company with great leverage," said Flanagan. "This is what Britannic did for Resolution Mark I.

"That with-profits fund gave Clive financial leverage in terms of doing the bigger deals later on. That is what Resolution Mark II is missing at the moment."

He believes that any deal to buy Scottish Widows would also include Scottish Widows Investment Partnership, the asset management division. He said both Tiner and Cowdery had signalled an interest in adding an asset management facility to the Friends Provident acquisition project.

Any bid for Scottish Widows would need to be 5bn or higher. Flanagan admitted: "You have to assume he (Briggs] has got that first ten seconds (on the phone] that a few other people don't have."After that I don't know if he will get favourable treatment."

One analyst said Resolution would need "bags of cash" in order to even speak to the Lloyds board about a sale.

The departure of Briggs for Friends Provident leaves Phil Loney, the managing director of Scottish Widows, as the sole internal succession candidate to Archie Kane, Lloyds' group executive director of insurance and Scotland.

Briggs, who had previously been managing director of the Lloyds business before being relocated to Newport to run the general insurance business, had also been considered a frontrunner.