Royal London to acquire CFS life business

Some 125 years after selling its first life insurance product, the Co-operative is to pull out of the business, axing 750 sales experts.

In a move that infuriated the union Unite, Co-op is to copy the model used by Britannia, with which it merged in 2009, to use French insurer Axa to provide its insurance products in future.

At the same, the Co-op is in talks to sell its £15bn life insurance fund and its Co-operative Asset Management arm to Royal London.

The announcements were made on Friday by Co-operative Financial Services, the financial services arm of the Co-operative group.

David Fleming, Unite national officer, said: "Unite has expressed to Co-operative Financial Services (CFS) disagreement with the decision to cease to provide life assurance products. The 750 employees potentially affected by this news will be deeply concerned and upset. Unite has already made clear that the decision to cease to be a provider of life assurance products is a very sad and monumental moment in the history of CFS, formerly known to many as Co-operative Insurance Society, and the whole of the co-operative movement.

"Unite is now pushing for redeployment options wherever possible and, where this is not possible, for all involved to be treated fairly during the process," Fleming said.

The decision was taken after a 20-month review and comes as CFS ploughs £700m into its banking operations. It currently has 90 Co-op Bank branches and 248 from Britannia and intends to look at ways of selling more financial products through the 3,500-strong network of Co-op corner shops up and down the country.

Announcement follows a strategic review of the mutual’s life and savings business, which will also result in the extension of its partnership with AXA for the provision of in-branch financial advice, across 90 Co-operative Bank branches and 248 branches of Britannia.

CFS will therefore be cutting 670 jobs, and transferring a further 82 to AXA.

The group’s chief executive, Neville Richardson, comments: “We understand that such news may be difficult for impacted colleagues and we have not reached this outcome lightly.”

He adds: “However, we were faced with rising regulatory costs in a business which was increasingly becoming sub-scale.”

CFS’s general insurance business was outside the scope of the strategic review and remains an integral part of its offering.