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Osmond admits realistic reporting reduces value of cash offer for hhg

Hugh Osmond’s Life Comp-any Investor Group has admitted that the value of the cash offer it made for HHG’s closed life businesses is lower than stated if viewed on a realistic reporting basis.

LCIG’s 1.025bn cash offer for HHG Life Services – the closed life books of NPI, Pearl, National Provident Mutual and London Life – was announced by both parties as worth about 79 per cent of the embedded value of the business when calculated on a traditional embedded value basis.

But on a realistic reporting basis, the accounting standard now adopted by the industry, this only equates to 69 per cent of the embedded value and much closer to the 65 per cent of embedded value that Resolution Life paid for the Royal & Sun Alliance closed life book last November.

LCIG’s bid has been accep-ted by the HHG board subject to shareholder approval being given at an EGM on February 21 but Resolution is continuing to follow up on the informal offer it made last week.

An LCIG spokesman says the value of the deal can be calculated in different ways and there has been no attempt to hoodwink HHG shareholders. He stresses that the offer has been accepted by the HHG board and he does not expect Resolution to be able to hijack the deal at the last moment.

A Resolution Life spokes-man declined to reveal details of its offer to HHG but admitted that, to be attractive to the board and HHG shareholders, it would have to be higher and tabled before the EGM later this month.

The LCIG spokesman says: “HHG have said they are talking to Resolution Life about a deal for HHG Life Services but we have an agreement in place with the board.”

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