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Abbey National to buy Scottish life assurance group

LONDON -- Mortgage lender Abbey National said Wednesday it plans to buy life assurance group Scottish Mutual for 285 million pounds ($493 million) and establish a separate life assurance company.

Abbey National said in a statement that the acquisition, its first since the company was floated in1989, was part of its strategy to increase the range of personal financial services it offers.

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The purchase is subject to approval by Scottish Mutual's voting members, various regulatory organizations and the Scottish Court of Session. It is scheduled to be completed by the end of this year.

In conjunction with the acquisition, the mortgage lender is to set up a separate life assurance company, to be known as Abbey National Life PLC, which will sell a range of branded products exclusively to Abbey National customers.

Abbey National group chief executive Peter Birch said the company had examined a range of options for its entry into the life assurance sector and opted for a strategy to 'acquire and build'.

The newly formed life assurance company will be based in the west of Scotland and should be ready to accept new business in 1993. Scottish Mutual is based in the western Scottish city of Glasgow.

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The Scottish group will retain its identity within the Abbey group and continue to distribute its products primarily through the independent financial adviser market, keeping its existing management, Abbey National said.

The board of Scottish Mutual has recommended the company's voting members back the deal.

Scottish Mutual had a total income of 380 million pounds ($657 million) over 1990, while payments to policyholders amounted to 213 million pounds ($368 million).

Founded 108 years ago, Scottish Mutual has a workforce of around 1, 000 people.

Analysts said the move would strengthen Abbey National in the personal finance sector, which it has chosen to concentrate on and should provide worthwhile long-term benefits.

Abbey National shares climbed 13p to 306p on the news.

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