Life assurer Guardian loses chief ahead of potential float

The chief executive of Guardian Financial Services is stepping down as its private equity owner Cinven considers a potential listing or sale of the "zombie" life assurer, worth as much as £2bn, according to people familiar with the matter.

Jonathan Yates, who joined Guardian about three years ago, was a big-name hire for the insurance consolidation vehicle, which ranks among Britain's largest managers of life funds.

His departure from Guardian comes after Cinven received several takeover approaches for the UK business, which stopped writing new policies 14 years ago but has more than 900,000 legacy policyholders, the people said.

The private equity house has yet to agree on a deal, however, and it is simultaneously exploring a possible flotation of 194-year-old Guardian, which would join rival Phoenix in the FTSE 250 index.

Mr Yates is planning to work for Cinven - whose recent transactions include the sale of Italian restaurant chains Ask and Zizzi, and the purchase of specialist finance group Premium Credit - in an advisory capacity.

In his new role he is expected to counsel Cinven on its separate project to consolidate the fragmented German life insurance market, where persistently low interest rates have raised concerns about the stability of the sector.

Mr Yates is a former finance director of Phoenix and ex-chief executive of Admin Re UK, Swiss Re's closed life business in the UK. Cinven hired him after it bought Guardian from Aegon, the Dutch life assurer, in a £275m deal.

Since then it has used Guardian, based near Blackpool, Lancashire, as a platform for more acquisitions. Under his leadership, Guardian bought Ark Life from Allied Irish Banks and several blocks of business from Phoenix.

The deals have boosted Guardian's assets under management to about £20bn. Insiders said the business had an "embedded value", a way of valuing life assurers, of more than £2bn, although listed companies in the sector tend to trade at a discount to this metric.

If it does press ahead with a float, Cinven would be likely to face questions from prospective investors about the performance of another of its insurance businesses, Partnership.

Since Partnership listed two years ago at 385p, shares in the annuity provider have slumped to 137p because of chancellor George Osborne's overhaul of the pensions system.

Bankers have been hoping that regulatory changes will trigger more consolidation in the sector - especially following the completion this month of Aviva's purchase of its FTSE 100 rival Friends Life, founded by the insurance dealmaker Clive Cowdery.

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Cinven has also been active in Germany as well as the UK. Last year it teamed up with the reinsurance group Hannover Re to buy Heidelberger Leben from Lloyds Banking Group, and a block of Old Mutual's policies in Germany and Austria.

Ian Owen, who leads Guardian's board, is expected to become executive chairman of Guardian on an interim basis.

Cinven declined to comment.

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