Britannic and Resolution merge |
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Published
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Fri, 10 Jun 2005 20:20
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Britain's top insurer Britannic Group has announced that it will be merging with the privately owned Resolution Life Group to create a combined business valued at about £1.8 billion ($3.3 billion).
Britannic also said that the combined group would continue to use the Resolution name and brand. According to present calculations the group will have around 6 million policies and 35 billion pounds of life company assets. The combined group would also be a front-runner for entry to the FTSE 100 index. Resolution Group, a specialist manager of closed life funds, was created last year by the combined group's executive chairman Clive Cowdery, who put in £500,000 of his own money into it. The combined group will have 54.5 percent Britannic shareholders while Resolution shareholders make up the remaining 45.5 percent.
| Analysts say that the deal should be viewed as a reverse takeover of Britannic, but company sources chose to call it "a true merger of equals". One loser here is the F&C Asset Management, whose lucrative contracts to manage £22bn of assets of the Resolution group stood cancelled due to the merger. The group's shares took an 8 percent dive in the backdrop of this news. Resolution said that it would be managing these assets in-house since Britannic already has its own fund management arm.
The merger will result in cost savings of around £20m, but on the downside, a Britannic spokesman confirmed that some jobs would be lost. Britannic's assets include Alba Life and Allianz Cornhill policies, while Resolution rules over the closed life funds of Royal & SunAlliance and Swiss Life. Commenting on the merger, Mr. Cowdery said, "This is an excellent merger which creates a compelling consolidator in the UK closed life sector." The merger is expected to be completed by autumn.
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