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Pearls of wisdom

So Pearl triumphs and takes over Resolution as its latest jewel.

A City saga comes to an end. One top City figure makes a fortune, a second continues to build his even more substantial one. But what does it mean for policyholders and their advisers?

Well, they get to benefit from economies of scale potentially.

We also get to see a very interesting synthesis of the Resolution closed-fund model with that of Pearl. Pearl, we are led to believe, specialises in using the latest investment thinking and tools to boost returns, Resolution specialises in more prosaic financial engineering of merging funds and reworking contracts to release value.

How much more policyholders get now is a very pertinent question and we will be seeking this answer from Pearl.

We will also be asking some tough questions about Pearl’s communications. Some of these policies across a range of insurers were sold by direct sales forces and IFAs with all manner of assumptions and promises. In the case of some direct sales forces, one can assume a limited level of understanding on the part of the investor i.e. they probably didn’t really know what they getting for their money at the time.

It may be in policyholders’ interest to stay as they are looked after well from an investment point of view, or because they have a generous guarantee. But they will only know if they get the information. If they have an adviser, he or she needs a host of information to construct a proper financial plan around the “closed” investment and any other savings a client may have.

Anecdotally, Pearl has not been the fastest or finest of communicators in the past. As the biggest closed-fund operator on the block by a mile, it needs to raise its game in this area.

But the biggest casualty of the whole affair is Friends Provident. It has been left bereft of chief executive Philip Moore and of a strategy to please the City. It has been left on the sidelines in a deal which would have seen its most executive team playing second fiddle to Resolution’s. It also faces questions about how it will fund growth. And it is the parent of Sesame. We hope it comes up with some answers that can satisfy shareholders, advisers and policyholders.

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