Insurer Resolution Life confirms talks with potential suitors

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The Independent Online

Resolution Life, the specialist insurer which joined the FTSE 100 last year, has held talks with a series of potential suitors that could end up bidding for the company. Resolution, which focuses on acquiring and running life insurance investment funds closed to new business, said yesterday that the Takeover Panel had asked it to make a statement to the Stock Exchange confirming the talks.

The insurer said it was engaged in "very early discussions with various parties concerning a wide range of possible transactions, acquisitions, business combinations, or a possible offer for the company".

However, sources familiar with Resolution's exchanges with the Takeover Panel said the insurer had not wanted to make the statement, because all of the talks had been preliminary conversations held as part of discussions with companies that might wish to outsource their own closed life funds.

As such, Resolution is understood to have held talks with potential partners or suitors including Prudential, Standard Life, Legal & General, Lloyds TSB (the owner of Scottish Widows), Friends Provident, Aegon, Swiss Re and Friends Provident.

"There can be no certainty that any of the options under review will result in a transaction or an offer being made by or for the company," yesterday's statement added.

Resolution has been extremely acquisitive in its attempt to build its assets under management, the key to securing the economies of scale required to make money from running closed life funds.

Earlier this year, its £3.5bn purchase of the life insurance businesses of Abbey, the bank, took its total assets under management to about £63bn. That deal followed the takeover last year of the insurer Britannic, and Resolution also made approaches to Standard Life before the insurer's demutualisation this summer, although these were rebuffed.

Analysts warned investors not to expect a straightforward deal from Resolution, which has found it increasingly difficult to buy closed life funds at significant discounts to their underlying value, a prospect that formed part of its original business model when launched by chairman Clive Cowdery four years ago.

One option would be a joint venture with an insurer such as Prudential, which said last month it was considering its options for its closed life funds.

Speculation about the company's future took the shares almost 5 per cent higher yesterday, with Resolution closing at 667.5p, 32.5p up on the day.