Resolution close to deal for Axa life insurance
Saturday 12 June 2010
Clive Cowdery, the insurance executive behind Resolution, is close to clinching a deal to buy the UK life insurance operation of France's Axa, for between £2.5bn and £3bn. The buy-out could be announced as early as next week, after talks that have gone on for more than a month moved towards a successful conclusion over the past day or so.
Mr Cowdery relaunched Resolution 18 months ago as an investment vehicle that he promised would consolidate the insurance sector through a series of acquisitions. So far, he has pulled off just one major deal, buying Friends Provident last summer, so a successful purchase of Axa's UK life assets would represent a substantial step forward for the business.
In theory, the two businesses could be rolled together, offering the prospect of significant economies of scale, particularly on back office operations, though insurance company mergers are notoriously difficult, with complex legacy IT operations to combine.
The deal would be regarded as a coup for Mr Cowdery, who founded Resolution Life in 2004, launched it on the London Stock Exchange the following year, and then saw it sold to Pearl in 2007. As part of that deal he negotiated the rights to the Resolution brand name, enabling him to start his new venture in December 2008.
Axa, meanwhile, is currently one of the UK's largest life insurance players, but will have noted the speed with which rivals are now seeking to exploit opportunities in faster-growing areas of the world – notably, Prudential's recent failed attempt to buy the Asian assets of AIG, the American insurer.
Axa has already been working on a complicated deal to boost its presence in Asia, though regulators in Australia have derailed the plans for now. Raising as much as £3bn from a Resolution takeover of its UK operation would give it additional firepower to explore other opportunities.
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