Axa mulls £2.75bn offer for UK business

AXA today confirmed it was considering the sale of its UK life and pensions business in a £2.75 billion deal with the owner of Friends Provident.

The merger of the operation with insurance buy-out firm Resolution would create one of the UK's largest protection and group pensions businesses.

Resolution, which is led by insurance entrepreneur Clive Cowdery, bought Friends Provident for just under 2 billion last year and is believed to have held discussions with up to nine companies since it was created in 2008.

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Mr Cowdery unsuccessfully tried to buy Bradford & Bingley two years ago.

Axa UK has around 10 million UK customers and employs 11,000 staff in the UK, although the French insurer said it will retain ownership of its UK wealth management business and keep a presence in the general insurance and healthcare markets in the UK.

It added there was no certainty that the talks with Resolution would result in a deal.

However, the cost savings stemming from the merger of the Axa UK life and pensions arm and Friends Provident would inevitably involve job losses.

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Resolution predicted "significant cost synergies", mainly from rationalisation of sales and marketing and operations and support costs.

Bristol-based AXA Life was formed in 1997 after the merger of Sun Life Group and AXA Equity & Law. Axa is known to have been keen to exit the mature UK life assurance market for some time.

Mr Cowdery's first investment vehicle, also called Resolution, was used to buy a string of life funds that had closed to new business, including Abbey National and Swiss Life. He sold the company to Hugh Osmond's Pearl Group for close to 5 billion at the end of 2007.

It has said it expects to consolidate three or four businesses by the start of 2011 with a view to selling the group by the end of 2012.

Resolution plans to pay for the Axa deal by raising 2 billion in a cash-call to investors.

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