Bupa insurance operation snapped up by Resolution
The acquisition, which is being funded by Resolution's subsidiary Friends Provident from surplus capital held within its life operating businesses, will give the firm a 10 per cent share of UK's group risk market.
Trevor Matthews, chief executive of Friends Provident, said: "It’s a sweet deal. Bupa has a very strong name in the group protection market so we're very pleased to add that to our business, and strengthen our group risk business product range and improve the profitability of our individual protection business."
The takeover is still subject to FSA approval, but is expected to be granted within the next three months.
The Bupa brand name will be used for the first six months, but the business will be relaunched under the new name of Friends Life in 2011.
Current chief executive Steve Payne will continue to run Bupa Health Assurance for a year, before bosses decide how to proceed further with his employment.
It is also expected that the group risk operation will form the base of the new Friends Life, while bosses will look at individual risk policies from across the firm to whittle down the best offerings.
The firm is not planning any redundancies among the 300 staff in Manchester and Bristol, although Mr Matthews said that, in the long-term, there may be job losses but this might be avoided by not replacing employees who leave or retire.
Lorreine Kennedy, head of care fee planning of St Albans–based CareMatters, welcomed the deal. She said: "My own experience with Friends Provident is that its systems are easy to use and it offers competitive rates, although it does have strict underwriting, with two recent applications loaded that were then accepted at normal rates by another company. Customers are so used to bank mergers and name changes that the transition will go by almost unnoticed.
"Bupa recently sold its care homes, further demonstrating its ongoing commitment to the healthcare market. It is remarkably good at healthcare."
The news follows Resolution's takeovers of Axa's UK life insurance arm earlier this year and last year's purchase of Friends Provident. Mr Matthews said the firm has not ruled out any more mergers in the near future.
He said: "We're keeping our eyes open for good deals as we continue on the journey to create a bigger and better business."
Mark Loydall, director of Leicestershire-based IFA Cambourne Financial Planning, said: "This announcement was a big surprise and completely unexpected. It is still early days in Resolution's takeover of Axa so it is difficult to know how that is going. To take over another provider so soon could prove challenging. Let us hope that customer service does not suffer."