Resolution has announced plans to acquire Bupa Health Assurance.
BHA is to be bought by Resolution subsidiary Friends Provident Holdings for an initial sum of £165.15m.
The purchase is the be funded out of cash held by Friends Provident but following the completion of the deal, Resolution expects £86m of reserves held by Bupa to be released immediately to offset the cost of the purchase. After tax this will mean £63m will be returned to Friends Provident and make the net purchase cost £102m.
As at December 31, 2009, Bupa had assets worth £309m.
Resolution says it expects to release a further £22m of capital following the transfer of the Bupa business in 2011.
The Bupa business will be run as a stand alone business with Friends Provident Holdings for up to a year but the Friends Provident group risk business will eventually be integrated into the Bupa business, while the individual protection products will be integrated on a ‘best of breed’ basis.
Resolution says it expects the integration of the businesses to cost £3m.
Friends chief executive officer Trevor Matthews says: “This acquisition will strengthen our Group Risk business product range and improve the profitability of our Individual Protection business. The BHA management team led by Steve Payne will bring additional highly valued expertise to the Friends team.
“The acquisition is subject to the approval of change in control by the FSA and the Guernsey Financial Services Commission.”