Despite this, some of the direr predictions made a couple of years back at the time of commission disclosure - that the number of life insurers would halve by the end of the century through mergers and closures - are not coming to pass.Many of the mutuals are digging in their heels and refusing to contemplate either takeover or merger. As the cost cuts begin to flow through, there will be more to follow. The economies of scale to be had by merging in this sector of the market - which involves door-to-door collection of premiums, often in cash - are plainly substantial, but the same sort of logic applies throughout the life assurance industry. There are too many life assurance companies, supporting too many sales teams, chasing too small a market. Over the next couple of years the combined company plans to cut its workforce by about 25 per cent Most of the benefit of that will go to policyholders But there will be a lot left for shareholders too. Add that to the immediate benefits of the release of orphan assets and the effect of the merger will be to lift dividends by 35 per cent for Refuge shareholders and more than 50 per cent for investors in United Friendly. For both shareholders and policyholders of Refuge and United Friendly, yesterday's merger looks like a win, win deal.
It was also, perhaps, an inevitable one, for even among the C1 and D social classes from which the two companies draw most of their customers, life assurance has become a distinctly unfashionable thing. As a consequence, the pressure for consolidation and cost-cutting is on as never before. Leisure and going out are destined to remain very high growth areas of consumer spending but finding the formula that attracts the punters remains as hard as ever. Mr Teare might do better to return the Rank Xerox cash direct to shareholders than to embark on a reckless spending spree.. But the honeymoon period is certainly over, as the 6 per cent fall in his share price yesterday amply demonstrated. But no one should underestimate the challenge, given the uninspiring springboard the rest of the group provides.Best of the bunch is probably film duplication, and if Hollywood continues to churn out films like Independence Day and Mission Impossible, Rank will have no problem shipping at least the current million or so videos a day.
The digital revolution means the video tape's day is numbered however, and this is probably a case of making hay while the sun shines.Elsewhere Rank is like a snapshot of 1960s Britain, with a stable of squandered, underinvested and tired brands. Odeon, Butlin's, Top Rank, Mecca - it's hardly the starting point of choice for a man setting out to rebuild a leisure giant.Hard Rock appears to have become the focus of Rank's attentions. Not least because if you add in the pounds 300m proceeds of other planned disposals, the new chief executive, Andrew Teare, has a worryingly fat chequebook to go with his understandably sketchy knowledge of the leisure business. If he spends that money wisely, Rank could return to the top table of the British leisure industry from which it has been notably absent for years. On the basis of Rank's conservative pounds 930m book valuation of its remaining interest in Rank Xerox, that initial punt on an interesting new technology is today worth the best part of pounds 5bn. Getting rid of the rump stake makes good sense both strategically and financially, but focusing on Rank's leisure and entertainment core makes the company considerably riskier. Its members' agency expects to make a one-off contribution of pounds 3.5m.Both payments will be covered by the release of litigation funds no longer needed.. Putting pounds 50,000 into what was then the new business of photocopiers in the 1950s stands out as one of the greatest corporate investments of all time.