Austock Life purchases Manchester Unity

Austock Life has acquired Brisbane-based friendly society Manchester Unity Limited, enabling the mutual life company to fulfil the demutualisation wishes of its members.

Under the terms of the acquisition, Austock Life paid no purchase price but took on all of Manchester Unity’s assets and policy liabilities, with all of the surplus management reserves of the friendly society, totalling $4.6 million, being freed up to be used for one-off policy enhancements and cash distributions.

“This transaction creates a unique demutualisation precedent because the transfer is from a mutual to a non-mutual life company, and unlike recent predatory initiatives aimed at mutuals, the objective here was to maximise ‘cash’ demutualisation benefits for Manchester Unity’s 10,400 members,” Austock Life managing director Ross Higgins told Money Management.

He explained that Manchester Unity was looking to join forces with a company with a good future and innovative products as its cost structure had become unwieldily for the revenue that its funds under management produced.

The new purchase means Austock Life’s balance sheet assets have increased from $26 million to over $40 million and its client base has increased by 10,400.

The acquisition follows Austock Life’s purchase of another small friendly society in 2005, however Higgins said the organisation would not be deliberately pursuing this course of action in the future.

“We’ll look at them and there are a few other opportunities around but they are time consuming and quite tedious transactions and we’re keen not to have a proliferation of old product there in run off. This was a nice clean balance sheet and they’re all in cash and fixed interest type products. There’s 10,000 policyholders and we weren’t paying any money for it so it was a nice easy one to do,” Higgins said.