Resolution abandons Friends Life split and listings

Friends Life parent company Resolution will not go ahead with plans to split the business into open and closed units ahead of a planned listing and has announced plans to streamline its board, according to the consolidation vehicle’s half-year results.

In its interim report for the six months to 30 June 2012, Resolution said it will also no longer seek further acquisitions and will no longer look to exit its UK companies, which it had planned to do through dual listings in 2014.

Value of new business for Resolution in the first half of 2012 was £67m, exceeding the total figure for the whole of 2011. This was driven by “operating synergies, migration to higher margin platforms and outsourcing arrangements”.

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However, IFRS [international financial reporting standards] operating profit before tax was £168m, including £27m of one-off considerations, down from the £390m recorded in the first half of 2011, which included £216m in one-off items.

This was due in large part to lower expected returns on its in-force book and disappointing performance in the international businesses, which was partly offset by reduction in costs of new business.

In June of this year Resolution announced that it was no longer going ahead with a planned £250m distribution to shareholders, deeming the move “inappropriate” in the current market climate.

The capital return was originally slated for the first half of 2012. However, based on estimates of the group’s capital position at the end of June 2012 and consideration of future capital requirements of Friends Life Group, the company’s board said it had decided not to go ahead.