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Last Updated: Thursday, 9 June, 2005, 07:38 GMT 08:38 UK
Insurance firms in 1.8bn merger
The new firm will have 35bn of assets
Insurance firm Britannic is to merge with privately-owned insurer Resolution Life in a deal that will create a business valued at 1.8bn ($3.3bn).

The combined firm, called Resolution, will have about six million policies and 35bn of life company assets.

Both companies have been buying up closed life insurance funds.

The new company will remain on the London stock market and could soon be a candidate for entry into the top-flight FTSE 100 index.

Savings and synergies

Britannic, which is listed on the London Stock Exchange, will issue shares to Resolution's private backers which include the Prudential and the wealthy Fleming banking family.

It positions the enlarged business as the leading consolidator of closed life funds
Paul Thompson, chief executive of Britannic

Resolution's chief executive Clive Cowdery has a 5% stake in Resolution.

He will be chairman of the enlarged Resolution, while the chief executive of Britannic, Paul Thompson, will be chief executive.

Heavy share losses have prompted many long-term insurance funds to close to new business and these closed funds have been attracting investor interest recently.

In February, pub entrepreneur Hugh Osmond bought HHG's closed life funds for 1bn, beating Resolution to the deal.

Mr Thompson said: "This is a compelling fit of two complementary positions the enlarged business as the leading consolidator of closed life funds, a sector we expect to show considerable growth."

Resolution and Britannic estimate that the merger, which is roughly a merger of equals, will boost annual pre-tax operating profits by 30m a year, partly due to cost savings of 20m.

However, there will be a one-off integration cost of 28m.

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