NIG Skandia is adamant that its £120 million acquisition by Winterthur, the Swiss parent of direct writer Churchill, will not affect its status as the "brokers' champion".

The takeover, sealed last Friday, will create the UK's eighth largest personal lines insurer with a combined workforce of almost 4,000 if, as expected, the deal is given the green light by the Financial Services Authority.

NIG was put up for sale last year, by its Scandinavian parent Skandia, which has decided to focus on its core markets of savings and investments. At that time, the asking price hovered around £400m and has drifted downwards since. As recently as the summer, Skandia was still looking for £300 million from the many insurers who expressed interest.

Churchill chairman Martin Long – who becomes non-executive chairman of Winterthur's UK non-life operations – called the £120m fee for NIG "a fair price".

Rafael Villarreal, senior credit officer at Moody's Investors Service, said: "NIG is not a company you would expect to pay a premium for since it has not been a star performer; its cumulative profits over the past few years have not been that high."

This assessment is supported by NIG's DTI returns, which show the total operating ratio on its 1998 motor account was 116.8%.

David Cubbin, marketing manager at Ryan Insurance, said that NIG's takeover signalled an increasing blurring of direct and broker channels.

"We will see more and more insurers with a foot in both camps," he said.

Martin Long has ruled out any immediate job cuts at NIG and stated it would be "business as usual" for the insurer.

He said: "There have been strict assurances from the NIG board to intermediaries, which I endorse, that it will not be sharing data on its customers. It will be business as usual for NIG."

Long added: "Winterthur is interested in growing the business using the broker distribution channel and increasing its purchasing power."

He said expansion had been necessary since growth in the direct writer market has peaked. "The main reason we bought NIG was because we wanted to appeal to the 50% of the market which doesn't use the direct channel. We wanted to carry on expanding and NIG has a very strong brand in the broker market."

He also reassured brokers that the takeover would not lead to a rationalisation of significant overlaps between the insurers' personal lines business.

Figures from the companies show NIG has 500,000 motor and 100,000 household policyholders compared to Churchill's 925,000 and 400,000 respectively.

And both insurers have broker interests in the motorcycle insurance market, NIG through Bennetts and Churchill via its recent acquisition of Devitt.

However, Long said: "We have a lot of different businesses and we need to review the situation before we decide the best way forward. In the case of motorcycle insurance it might mean using our increased leverage to sell to a wider market."

John Carrier, who remains managing director of NIG, stressed: "The acquisition will not affect NIG's rate structure. We will continue to run autonomously and remain the brokers' champion.

"We now have a parent company that has every confidence in our development in the UK and is 100% behind us."