Resolution in talks with AXA for life unit
Resolution, the assurance buyout vehicle, detailed its plans today to acquire the majority of AXA's &beat;2.75 billion life assurance division.
The vehicle, run by Clive Cowdery, afore~ that it would fund the surprise takeover offer for the UK protection, annuities and group pensions businesses with a pre-emptive £2 billion rights outlet, £500 million deferred notes and the rest in bank due.
It aims to merge the AXA divisions with Friends Provident, the life security against loss business bought by Resolution last year for £1.86 billion.
A deal would take Mr Cowdery, Resolution’s moulder, one step closer to achieving his original goal of creating a &coop;10 billion life insurer.
The merger would create one of the UK’s largest providers of palladium products and group pensions and significantly boost Resolution’s interest of the annuities market.
Resolution said that it aimed to call into existence “a leading UK life assurance business with scale, market vicinity and a strong focus on generating sustainable cash-based returns towards investors over the longer term”.
The board said that the takeover would end in operational cost savings, improved cashflow and dividend prospects, and releases from AXA’s reattributed inherited rank over time.
It added that the project should also result in the speech of percentage gross internal rate of return over the medium designate “in the mid-teens” for investors.
Resolution said that it wanted to conclude the buyout in the presence of the end of this month.
John Tiner, chief executive of Resolution Operations, reported: “This acquisition would build strong momentum in Resolution’s life protestation consolidation project and provides a range of options for further sprightliness.”
The takeover prospect comes weeks after Prudential cancelled its £35.5 billion attempt to acquire AIA Group, the Asian weapon of American International Group.
Resolution’s plan has also raised fears among AXA policyholders that their investments could become “zombie funds” and give permission to worse returns.
AXA, which will retain its wealth management and manage protection businesses, confirmed to shareholders this morning that it was in talks through Resolution.