Resolution first-half profit exceeds forecasts

20-09-2006

Life insurer Resolution has posted a rise in first-half profits, with a better-than expected performance boosted by acquisition-led growth.

The company, which became Britain's largest consolidator of closed life funds after merging with rival Britannic in June 2005, said that its operating profit in the six months to June 30th was £115.9 million on a European embedded value basis (EEV). That compared to a pro forma of £85.8m in the last half of 2005.

The results, which do not take into account Resolution's £3.6 billion acquisition of life insurance operations owned by UK bank Abbey earlier this year, show that the insurer's embedded value, which includes the present value of long-term future business, is at £2,215 million, compared to £2,14 million at the end of last year.

Resolution raised its first-half dividend payable to shareholders by 15 per cent to 6.64 pence after beating its target of 13 per cent growth.

Resolution group chief executive Paul Thompson said that the insurer was confident of delivering an internal rate of return for shareholders of a least 16 per cent from the recent acquisition of Abbey's life businesses.

The company also expects to meet its target to deliver £38 million a year "cost and asset management synergies" following its merger with Britannic.

Mr Thompson added that Resolution was well placed to take advantage of further expected consolidation in the UK life insurance market.

"Over time we believe the UK life sector will go through further restructuring and consolidation," he said.

"Resolution has the size, track record and profitability to play an active part in this consolidation."


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