Resolution to double its insurance operations

Resolution's chief executive, John Tiner, said he planned to nearly double the size of the company's insurance operations after sealing the £2.75bn purchase of French giant AXA's UK operations.

The Guernsey-based operation plans to merge the business with Friends Provident, which it already owns, before seeking further insurance deals. But Mr Tiner refused to give any details of job losses saying it was "too early" for that.

However, Resolution plans to reap savings of £75m a year from the combined businesses, which means a large number of redundancies is all but inevitable.

Mr Tiner also declined to comment on whether one of the those deals could be a takeover of Prudential UK. There has been speculation that Resolution has been courting Prudential investors with a view to a bid for the operation.

Mr Tiner said: "We've got a lot of work to do integrating AXA UK with Friends Provident. I'm not going to comment on any other deals, but the businesses we own have an embedded value of £6bn and we'd like to get that to £10bn."

The deal will see Resolution paying £2.25bn in cash and £500m in new shares. Mr Tiner was at pains to point out that much of the underwriting for the share issue was being borne by Resolution's existing investors, who will receive a fee of around 1.75 per cent. That could leave as little as 1 per cent for investment banking underwriters led by Barclays Capital and RBC Capital Markets. The average underwriting fee is 3.25 per cent.

Mr Tiner also said that Resolution was consulting with the finance arm of the Unite union over the potential job losses. While the deal includes AXA's traditional life insurance and pensions businesses together with its annuity business, it does not involve the company's wealth management arm.