Resolution’s hunt for deals gathers pace
RESOLUTION, the insurance-focused takeover vehicle owned by entrepreneur Clive Cowdery, says it is still hungry for acquisitions, boosting shares in possible target Legal & General.
Resolution reiterated its aim to buy two more major insurers within 15 months following its takeover of Friends Provident, saying upcoming regulatory changes made consolidation “both desirable and inevitable” in the sector.
Chief executive John Tiner said noises from European regulators this week that they are considering easing proposed capital restrictions on insurers would not alter the company’s plans.
In their current form, the so-called Solvency II rules could cost British insurers £50bn but it appears that the European Union will bow to pressure to water down capital requirements to strengthen insurance balance sheets.
Tiner said: “There’s still a lot of work to do before we find out where we end up.”
Given the timetable of most takeovers, the City expects at least one bid by Resolution to be made within three months.
Most speculation has focused on insurance businesses owned by Royal Bank of Scotland and L&G, whose shares jumped 25 per cent last month on initial takeover talk.
Yesterday L&G rose 2.45p to 87.95p. Resolution, which spent £1.8bn taking over Friends Provident, raised £600m when it floated, leaving it with £310m in cash to spend buying up rivals.
Updating the market on the first nine months of 2009, Friends Provident said its new life and pensions business sales slumped 28 per cent to £505m.