Resolution to return £500m to investors
LIFE insurance asset buyer Resolution yesterday pledged to return £500m cash to shareholders over the next year, starting with £250m of share buybacks that kick off today.
Resolution, which is restructuring life insurance books bought from Friends Provident, Axa and Bupa, will return the second £250m to shareholders in the first half of 2012 after making £235m in capital synergies this year.
In a statement its board also ruled out further overseas acquisitions, which it had suggested at previous meetings but found shareholders were largely opposed.
“The UK life project remains on track to deliver its targeted returns; and the board confirms that Resolution will be exclusively focused on the UK life project,” it said.
Resolution has been sitting on a cash pile of more than £1bn in recent months. Investors have been expecting it to outline its plans to return that since February, when it said it was highly unlikely to buy any more UK life insurance policy books.
However, the firm warned the synergies – a result of consolidating the three life companies into one, more efficient whole – are subject to both regulatory and delivery approvals.
The £500m is on top of £400m of annual distributable cash it already intends to return. It also hopes to release more cash as it clarifies its Solvency II needs, which may require it to hold less capital than at present.