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Resolution pre-tax operating profit falls 60% to £274m

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Resolution has reported a pre-tax operating profit of £274m for 2012, down from £681m in 2011.

Resolution says the fall in IFRS-based operating profit is due to one-off benefits of £404m included in 2011’s accounts.

Its UK and heritage divisions saw pre-tax operating profit fall from £672m in 2011 to £300m last year.

This is made up of a £332m profit in the heritage division and a £32m loss in the UK division.

Resolution is targeting total cost savings of £160m by the end of 2015. It had achieved £86m of this by the end of 2012, with a further £40m of savings expected to be found in 2013.

In December, Friends Life – the brand name for the life company established by Resolution – confirmed 150 staff would be made redundant as part of its cost cutting drive.

In August 2011, Resolution announced plans to split its operations into an open book and closed book of business. The UK division combines the corporate benefits, protection and retirement income business units and the heritage division is made up of closed book business. The divisions are still in the process of being fully separated.

From 27 March Friends Life will no longer be externally managed by Resolution and will become a standalone insurance business.

The decision, announced in August last year, was made to simplify the provider’s governance structure and protect the company’s premium stock exchange listing after the FSA announced plans to tighten the rules governing “externally managed companies”.

Funds under management in the heritage division fell from £70.8bn in 2011 to £68.7bn in 2012, while FUM in the UK division rose from £16.9bn to £19.7bn.

Resolution’s corporate division reduced its losses from £69m in 2011 to a £17m loss last year, while the international business, which reported pre-tax operating profits of £78m in 2011, saw losses of £9m in 2012.

Resolution chairman Mike Biggs says: “These results evidence the financial benefits of strategic decisions taken in 2011, particularly in the UK. Following the International strategic review in 2012, the board believes the group is well positioned for future success.”

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