Life assurance consolidator Utmost Group has set its sights on a London-based initial public offering in the next “couple of years”, chief executive Paul Thompson has confirmed.
Having appointed a non-executive chairman, James Fraser, last month, the firm has used its UK regulatory holding company to raise a £400m Tier 2 bond. This has normalised the company’s capital structure, which will then allow the company to float the business.
Currently, the firm’s equity value sits at around £1.6bn. It intends to float when its equity value is in the billions, Thompson said.
“In the next couple of years we plan to float the business,” Thompson told FTAdviser. “We’ve grown the company since 2013 through acquisitions.”
The firm counts 13 acquisitions to date, including Axa Isle of Man (October 2016), Reliance Mutual Insurance Society (March 2018), and Generali Worldwide (February 2019).
Its incoming acquisition of Quilter International is set to be its largest yet. Valued at nearly £500m, the deal will see £21.7bn of assets under administration in life assurance policies transferred to its books.
This will take Utmost’s AUA over £60bn, making the acquisition - set to close at the end of this month - equal to one-third the size of its entire business.
This year, Thompson said Utmost and Quilter International have together generated £5bn in new business, and nearly £1bn in net client cash flow.
The consolidator hired a chief technology officer in July. Dan Peacock brought with him eight years experience from AIG, where he concluded his tenure as chief information officer.
“We hired a CTO for the Quilter acquisition,” Thompson explained. “We’ll be inheriting their processing platform, but our aim is to try and reduce that.”
The consolidator is split into two parts, including an international life assurance arm and a UK run-off business. Until recently, it has focused on expanding internationally.
“On the international side, we’re not looking at more acquisitions now,” he confirmed. “We’ve got the geographical footprint and want to focus on organic growth now.”
Utmost Wealth Solutions is the firm’s main international brand serving high-net-worth clients, with its average life assurance policy contribution totalling £500,000. In Italy, this figure has reached £3.5m.
These advised-only international life assurance products are serviced off-shore but around the world including in the UK, where 43 per cent of Utmost International’s annual premiums sat in 2020.
This business model means HNW clients in the UK can trade their assets tax-free as their gross value rolls up, meaning they don’t pay income or capital gains tax until they encash the policy. “It’s essentially like a tax-deferral pension,” Thompson explained.
The products are also portable for expats, meaning they pay tax in the year and in the country they cash the policy in.
M&A focus shifts to UK
Utmost’s UK business targets the mass market. Its average policy size sits at £50,000.
A consolidator of closed UK life and pensions businesses, it manages £7bn AUA and is home to 380,000 customers.
“We want to build [the UK business] to a similar size as our existing international business,” said Thompson. Currently, he reckons Utmost’s UK arm is second in the market to rival Phoenix Group.
“Ideally we’d like to do one or two sizeable deals over the next couple of years,” the chief executive explained.
“We’ve got much more of a focus on inorganic growth in the UK. [...] Our UK mass market products will stay in circulation. We want to buy more books of business and run them effectively.”
With its international footprint established, UK growth is next on the agenda to support Utmost’s trajectory to an IPO.
Thompson said his team could see insurers pulling out of the HNW space in the UK, instead focusing on the mass market.
This is why the firm’s international business focuses on net client cash flow, whilst its UK run-off focuses on making its existing assets perform better.
The chief executive did not share further details on Utmost’s planned M&A in the UK.
ruby.hinchliffe@ft.com
