Industry: Acquisition of closed UK life business by Resolution Life Group
Resolution Life Group has announced it is to buy Swiss Life's closed UK life business. Resolution's offer of £205m, which amounts to approximately 76% of Swiss Life's projected price of £271m, accounts for almost 750,000 in-force policies. The takeover will not affect the contractual benefits of any Swiss Life policyholders.
If the acquisition is successful, Resolution will own closed funds to the value of £1.6bn and have more than three million policies in-force. It will be the company's second closed life fund acquisition in under a year, following the purchase of R&SA Life from Royal and SunAlliance Insurance Group for £850m in September 2004.
Swiss Life's administration services will be outsourced in line with Resolution's business model. Of the 280 Swiss Life UK employees, those that are retained will see their roles re-orientated around financial management and customer relationship management. The proceeds of the sale will be reinvested in Swiss Life's non-UK operations.
The transaction with Resolution is subject to approval from the Financial Services Authority but is expected to be complete by the end of the first quarter of 2005.
Rolf Dörig, chief executive at Swiss Life Group commented: "The transaction will further reduce complexity in our Group and represents a clean exit from the United Kingdom, where we are eliminating the operational risk and providing security for our shareholders. Clients and employees can be assured that they will be in the hands of a company specialised in the management of closed life funds."
Brian Williamson, chairman of Resolution, echoed these sentiments: "Resolution was formed to provide an industry solution to the problem of closed life funds. The acquisition of Swiss Life is another important step towards achieving that goal."
The decision follows Swiss Life's announcement in September 2002 that it was looking for a new parent for its UK arm. After failing to find a buyer, it closed all new individual business in July 2003 and suggested closing its group business the following month.
UnumProvident agreed to buy Swiss Life's UK group business in August 2003, before the Office of Fair Trading intervened and decided to refer the proposal to the Competition Commission. UnumProvident subsequently withdrew their bid before the commission published its report. The deal would have given UnumProvident more than a 50% share of the UK group life market. Resolution plans to make further acquisitions but is expected to seek a public listing to fund growth in the medium-term.
