Identity issue for insurers

By RICHARD BRADDELL

State Insurance and New Zealand Insurance may continue to operate as separate companies despite the merger of their British parents, CGNU and Norwich Union, in May.

The two companies are New Zealand's two largest insurers and because of that a clearance for the British merger was obtained from the Commerce Commission.

But CGNU chief executive Bob Scott said the two New Zealand companies might continue to operate as separate entities, although it was possible they would share some back-office functions such as procurement.

"The key thing in the insurance business is having scale," said Mr Scott. "The great advantage we have in New Zealand with the two businesses is that they both already have scale."

With NZI deeply into commercial insurance, the overlap was limited to the personal or consumer lines that were State's main focus, he said.

Mr Scott is a New Zealander whose ascent to the top of the London-based organisation began with General Accident's takeover of NZI in the mid-80s.

He said the merger of Norwich Union and CGNU resulted in an insurance "national champion" that Britain had lacked.

CGNU alone had a £23 billion ($78.4 billion) sharemarket capitalisation. It was the leader in Britain in the life and general insurance markets, with the clout to take on the likes of Germany's Alliance, Switzerland's Zurich, France's Axa and Italy's Generali.

"We are expanding into Europe, where there is going to be huge growth, particularly in retirement savings because of the demographics, in the immediate future," said Mr Scott.

Asked if CGNU would do something about its name, he conceded that it was not the flashest but it was only a corporate name. Operations in different countries worked under brands such as NZI.