Insurance merger a big birth

WELLINGTON - The merger of Colonial New Zealand with Sovereign Group is expected to create the country's largest life insurance company and second-largest fund manager.

ASB Bank group, which owns Sovereign, has confirmed that the merger will affect domestic operations, with head office moving from Wellington to Auckland, potentially affecting 250 jobs.

The merged life insurer would have an annual premium take of $460 million, said ASB managing director Ralph Norris.

The new company would also be the second-largest fund manager, with $2.2 billion under management, and the fifth-largest bank, with assets of $17.4 billion.

Mr Norris would not be drawn on job losses.

"While it is inevitable that positions will be lost as a result of the integration, the scope of these cannot be quantified at this time."

A "substantial" presence would remain in Wellington. Mr Norris said ASB's strong growth would create new opportunities for staff.

The loss of Colonial from Wellington's corporate scene adds to the growing list of businesses shifting to either Auckland or Australia in recent years. Other financial-sector companies that have left include the Bank of New Zealand and ANZ.

Sovereign managing director Ian Hendry will head the merged company, replacing Colonial chief David May, who will step aside.

Colonial, the second-biggest financial service company in New Zealand after AMP, has 32,000 Kiwi shareholders.

- NZPA