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Resolution reveals 28% drop in new life business

Resolution has announced a 28 per cent fall in new life and pensions business to £505m in the first nine months of 2009 from £701m for the same period last year at the newly acquired Friends Provident.

The firm has announced a tie up with Virgin Money to sell Friends Provident’s protection products similar to the distribution arrangements recently announced with Tesco Bank. It says it is on the search for further distribution deals in this area.

According to Resolution, the drop in sales reflects the difficult market conditions experienced by the life sector and the actions taken by Friends Provident to improve margins.

Total UK life and pensions business was down 30 per cent from £424m to £295m over the period. Individual pensions sales dropped 51 per cent from £37.4m to £18.4 and individual investments sales plunging 69 per cent from £7m to £2.2m but Friends Provident says this is inline with its plans to focus away from these product segments.

UK corporate pension sales were down 31 per cent from £319.1m to £218.7m in the nine months to September 30.

Resolution reiterated that it is on the hunt for further acquisitions in the life and asset management industry but refused to comment on whether take over talks were going on with potential targets or when it expects to strike another deal.

The firm says it has established a number of initiatives to best position Friends Provident for future integration with other life assurance businesses and to ensure its governance, internal control, finance and assurance processes are well aligned with Resolution’s.

Under the Friends Provident deal, which completed last week, many Friends Provident shareholders took shares in Resolution rather than cash, resulting in £312m of cash being used by Resolution against the maximum of £500m made available in its offer. 

After allowing for the cash component, routine outgoings and assuming the settlement of acquisition costs, Resolution expects to have approximately £310m of cash and short-term investments.

Chairman Michael Biggs says: “Since the quarter end, we have completed the acquisition of Friends Provident. This is an important step in our first financial services restructuring project, which is focused on UK life assurance and asset management.

“We are pleased that many Friends Provident shareholders took shares in Resolution rather than cash. As a result, against the maximum of £500m made available in our offer, only £312m of cash was used in completing the acquisition. 

“We are now focused on securing further acquisitions to build the enlarged group.”

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