Equity & Law/Sun Life Merger Seeks Common IT

The London-based investment management arms of AXA Equity & Law and Sun Life & Provincial are to be merged into one City location, and work is already underway to implement a common systems and operations platform for the combined operation. The merger--a result of French insurance group Axa's decision to merge its UK life assurance businesses--will create an investment management group with more than £30 billion in assets under management.

Chris Cheetham, managing director, Axa Equity & Law Investment Managers, says there are no firm plans yet on which operation will be used. "We are addressing the question at the moment," he says. "We intend to develop an IT strategy for the merged firms which will enable us to provide high quality operational support for the new investment management business."

The two investment management units have already formed an IT strategy/integration group, which was due to meet as IMT went to press. A spokesperson for Axa Equity & Law declines to provide details as to the size, makeup or leadership of that group, but says: "The main task is quite simply to work towards a strategy for IT integration for the merged group." Sun Life is the larger of the two units, with £20 billion in assets, compared to Equity & Law's £10 billion.

Systems integration plans are expected to be complete by year end, a goal that may entail scrapping both Sun Life and AXA's systems and adopting a completely new system, says Cheetham.

Equity & Law uses a combination of in-house and externally-developed systems. It is a user of Hiportfolio, a PC-based system supplied by DST International, Barra's risk management software and performance measurement software from Micropal. It also runs an internally developed system running on IBM OS/2 and coded in Pascal with a proprietary database.

According to Equity & Law's operations manager Stewart Norwood, the company has a preference to reuse developments internally, before considering buying a packaged system. Building internally is a last resort, he says. "It means we don't reinvent the wheel. If anyone in the group already has anything that suits our needs we will use that. If someone out there has a package which meets our needs, we'd perform a detailed evaluation and if there is a high match between it and our business and technical requirements we'd accept it. We would want the package architecture to be compatible with our IT strategy," says Norwood.

Sun Life Asset Management uses Maxim, which is packaged in the US by Sungard with a basket of financial services and which runs on an IBM mainframe with a DB2 database.

While Sun Life Asset Management has a staff of 20 working in IT, Equity & Law's investment management arm employs 15 IT staff. The Equity & Law spokesperson says: "It is impossible to say whether there will be any job losses or how many, but the whole point of the merger is not about job cutting. The whole idea is to avoid job losses at all costs."

A main objective of the merger of the two units is to grow the combined asset management operations. The group expects a £48 million one-off bill for implementation costs over three years. The enlarged asset management group will trade as Axa Sun Life Asset Management.