Resolution Ltd, the insurance buyout business founded by Clive Cowdery, announced yesterday it would return £500m to investors over the next year.
The company will start buying back £250m of its shares on the open market today. It will return another £250m in the first half of 2012 if it achieves its capital efficiency targets. The decision to return cash caps the acquisition phase of Resolution's plan to combine UK life companies. Since launching in late 2008, the company has bought Friends Provident, most of Axa's UK life insurance business and Bupa's life and protection arm.
Mr Cowdery's original plan, announced with great fanfare, was to shake up the life sector and amass businesses worth £10bn but Resolution stopped short of that target.
John Tiner, the chief executive of Resolution Operations, said: "We have got an £8bn business in about 20 months since we bought Friends Provident and we are pretty happy with where we are, really."
Shareholders were unhappy late last year when Resolution started eyeing deals in Europe and said they would sooner have some of its £1bn cash than see it spent on deals outside the UK. Mr Tiner said yesterday that he and Mr Cowdery were still sizing up acquisitions outside the UK but that these would be made through new buyout vehicles. Deals could include combining closed life funds in the US or Europe, he said.
Resolution Ltd could look at further acquisitions when shareholders have their cash but it will concentrate on existing businesses under Andy Briggs, who joined as chief executive last week, Mr Tiner said.
Mr Briggs replaces Trevor Matthews, who is joining rival insurer Aviva. Mr Tiner said Resolution would enforce Mr Matthews's six-months' notice. "Trevor has been released into the garden," Mr Tiner said. On Mr Matthews' hopes that he would be allowed to join Aviva earlier, Mr Tiner said: "Well, there you are."