Buyout vehicle Resolution expects to have £500m of excess cash to return to shareholders over the next 12 months after completing its work examining the cash and capital position of Friends Life, its new proposition formed from the merger of Friends Provident and Axa's UK life and pensions business.
The cash falls into two components:
- excess cash currently held at the Guernsey top company, which is being returned immediately by way of a £250m share buyback; and
- surplus cash expected to be released from Friends Life group by the end of the year as a result of the implementation of £235m worth of capital synergies.
Resolution's policy is to return excess cash released from its 'UK Life Project' to shareholders to the extent that it is not expected to be required for further M&A opportunities in the short to medium term.
The consolidation vehicle founded by Clive Cowdery (pictured) said today these returns are additional to its previously-announced cash and dividend targets, which include a distributable cash target of £400m per annum after interest costs from 2011.
It added the implementation of Solvency II "may provide potential for further cash returns in 2012 and beyond".
Resolution chairman Mike Biggs said the UK Life Project remains on track to deliver its targeted returns.
"Today we have set out our clear and transparent capital framework for the enlarged group," he said.
"This along with our strategy statements in February and our results in March have highlighted the strong value potential from the UK Life Project.
"We are pleased to demonstrate the delivery of this value through our cash returns announced today and from our strong dividend commitments."
