Talks fail to defuse Refuge merger row

A row threatening the proposed pounds 1.4bn merger between Refuge Assurance and its rival United Friendly looked no closer to being resolved last night, writes Nic Cicutti.

Senior executives from both insurace groups held a lengthy meeting yesterday with Perpetual, a leading Refuge shareholder which is opposed to the deal.

Neil Woodford, income fund manager at Perpetual, said that while the meeting had been cordial, he still had to make up his mind on the issues at stake.

"The meeting at our offices in Henley-on-Thames was lengthy and very detailed," Mr Woodford said. "The other sides put their case very forcefully and we have some very important decisions to make in the next week or so.

"I do not want to prejudice things by saying how I feel about things at the moment because there will now need to be some discussions with analysts and others."

Mr Woodford added that during the meeting he was left in no doubt that John Cudworth, Refuge chief executive, and George Mack, United Friendly's current finance director and chief executive-designate in the merged insurer, both strongly believed in the benefits of the deal to both shareholders and policyholders.

But Perpetual, which owns about 7 per cent of Refuge shares, still needs to be satisfied about those benefits before it would vote in favour of the merger at a special meeting of shareholders next month. Neither Mr Cudworth nor Mr Mack could be contacted for comment yesterday.

The wrangle between Perpetual and Refuge centres on the exact proportion of the pounds 500m of so-called "orphan assets", which are attributable to shareholders before the merger with United Friendly takes place.