UK financial services merger creates £35bn fund manager

Financial services company Britannic unveiled a £1.8bn (€2.7bn) merger today in a move set to create a leading manager of closed life insurance funds.

The tie-up with Resolution Life will create a group with around six million policies and £35bn (€52.2bn) in life company assets.

Britannic shareholders will hold 54.5% of the enlarged group, which will be rebranded Resolution and generate “significant operating efficiencies”. The merger terms did not detail the impact on jobs at the proposed new company.

The group, which could be a candidate for entry to the FTSE 100 Index, will be headquartered in London with the life operations run from Wythall, in Worcestershire, and Liverpool. The asset management division will be based in Glasgow, where Britannic currently has offices.

The pair said the deal gave policyholders the benefit of economies of scale while it believed the move also offered a stronger position as the sector consolidates following the closure of a number of funds to new business.

Britannic, which dates back to 1866, has refocused itself around two core businesses, asset management and assured services – which offer closed life funds in run-off, pension fund services and unit trust products – following a profits warning in 2003 and a business shake-up.

The group acquired the life operations of Allianz Cornhill in December for £110m (€164m) and the Century Group in March for £44m (€65.6m).

Resolution, whose backers include Prudential Assurance and Standard Life Assurance, manages more than £22bn (€32.8bn) of assets and 2.7 million policies.

It generated major scale last year when it acquired the closed life insurance operation of Royal & Sun Alliance for around £850m (€1.3bn). Resolution’s chief executive Clive Cowdery, who is General Electric’s former head of insurance, will be executive chairman of the enlarged company.