Most of Resolution's first trading year was spent on organising the successful acquisition of Friends Provident. So apart from income generated from cash on deposit, last year's figures were made up of the profit Friends Provident reported in the 8 weeks between its acquisition on 5 November and the end of December.
The financial position was further muddied by the fact that Resolution bought Friends Provident for just 69 per cent of the embedded value as of 30 June 2009. And on an IFRS basis, the net assets of Friends Provident attributable to Resolution's ordinary shareholders were £3.2bn at the time of the acquisition, leading to a gain on the purchase of £1.2bn.
Friends Provident's performance last year saw sales on an annual premium equivalent basis fall from £1.01bn to £873m, mainly as a result of the decision to withdraw from cash intensive, less profitable lines of business in the UK. However, the business retains a sound financial base, with an Insurance Group Directive surplus of £1bn.
Resolution's plans for Friends Provident will become clearer as time goes by, but chief executive John Tiner has already indicated his intention to make two more significant acquisitions before 2012. "The route to money is through scale", he added, emphasising the benefits of an integrated and streamlined back office organisation and better distribution network.
| RESOLUTION(RSL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 77p | MARKET VALUE: | £ 1,858m | |
| TOUCH: | 76-77p | 12-MONTH HIGH: | 112p | LOW: 68p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 179p | EMBEDDED VALUE: | 145p | |
| Year to 31 Dec | Gross life premiums(£m) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 133* | 1.17** | 3.21# | 2.72 |
| % change | - | - | - | - |
* covering the period from Friends Provident's acquisition on 4 November 2009 to year end **Includes £1.2bn gain on the Friends Provident's acquisition # Based on operating profit after tax of £30m | ||||
