Acquisitive Resolution keeping eye on insurance industry developments

BUYOUT firm Resolution is on the hunt for further acquisitions following a sharp rise in profits at its newly acquired Friends Provident business.

The comments come days after Aviva rejected a 5bn bid approach for its general insurance business from rival More Than insurer RSA. Resolution said it is monitoring developments in the industry, but declined to say if it was interested in any of the Aviva units or in the Paternoster insurance company, which may also be sold.

"Our job is to follow very closely developments in the UK life insurance industry," said Resolution chief executive John Tiner.

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Last night Aviva's shares rose five per cent to 397.3p on new rumours that French rival Axa could make a bid for the company.

Resolution said tough trading conditions in the UK are reinforcing the case for more deals in the sector.

Resolution bought Friends Provident at the end of last year and is on the verge of completing a 2.75bn takeover of Axa's UK life and pensions arm.

It hopes to announce another deal in the next 12 months as it looks to increase scale and build market leading positions.

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Announcing Friends Provident's results for the six months to June 30, Resolution said strong growth overseas and greater investor confidence at its Lombard wealth management business offset difficult conditions in the UK.

Total sales of 458m on an annualised premium basis – representing new regular premiums plus 10 per cent of single premiums – were up 42 per cent on a year earlier. In the UK, sales were six per cent higher at 203m.

Operating profits for the Friends business jumped to 157m from 29m.

Resolution, which was founded by insurance entrepreneur Clive Cowdery in 2008, said the UK life assurance sector suffered from overcapacity and structural inefficiencies.

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