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MGM cites RDR ‘opportunities’ as it seeks buyer

Rule changes could see shift towards direct-to-consumer sales and technological solutions, according to director.

By Donia O'Loughlin | Published Jul 16, 2012 | comments

Chris Evans, chief executive of MGM Advantage, has confirmed to FTAdviser that the insurer is conducting a strategic review that will look into a potential sale of the business ahead of the Retail Distribution Review, which he says will bring “significant opportunities”.

In an interview with FTAdviser, Mr Evans said that the proposed sale of MGM forms part of the firm’s biannual strategic review, the aim of which is to see if current business plans achieve maximum value for members.

National press reports at the weekend stated that the insurer has a potential price tag of £200m and that investment bank Evercore has been appointed to seek buyers. However, Mr Evans refused to confirm whether either of these claims are true.

Mr Evans said that the group has seen a 190 per cent compound annual growth since 2008 and that potential investors have noticed this.

Mr Evans said: “We get contacted on quite a regular basis about this [a buyout] because our space is very attractive. It’s a growth area because of the burgeoning baby boom population and we have a track record of success.

“We have to pay attention when people come and say we want to to be involved with us. It’s part of our duty to our members to look at it but it’s only part of an overall review which is looking at a whole range of options.

“It is partly driven by RDR because we see there being significant opportunities post-RDR and we want to see how we can optimise that opportunity as part of the review.”

Aston Goodey, director of sales and marketing at MGM, told FTAdviser: “What is exciting and timely is that RDR does present itself to new opportunities going forward.

“Different distribution opportunities could include direct to consumer... [or] technology through websites [and] platforms. There is a whole array as to how that will change and there is a real opportunity for us to lead that change.

“We have always been an innovative provider and quick to react when opportunities present themselves, so for me, it’s around capitalising on those and remaining ahead of the game.”

On the rumours regarding the price of the business, Mr Goodey said: “There isn’t a price tag. There is an ongoing review and we are talking to people.

“We are considering not just interest being showed by external people but internal options as well. It would be very premature to even be thinking about that until the review is finished.

“This review is looking at how we can maximise value for members so anything we would do we would only do if it was beneficial for members and produced greater value than what we are currently doing.”

Mr Evans said that group will make sure it is “generating as much benefit as we can” and that MGM wants to be able to take up opportunities that it has seen in terms of growth in the market.

He would not commit to when MGM will be making an announcement but did say that he expects to go back to the board in September with the conclusions of the strategic review.

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