‘Closed life’ giant emerges

Closed life assurance funds, put up for sale by companies bored with low returns and hot competition, offer potentially fat rewards and lucrative commissions for companies which buy them to run them off — provided they can be put together to achieve economies of scale. That is the logic of the £1.87 billion merger of Resolution Life and Britannic Group, which has galvanised the market.

The deal is a reverse takeover of Britannic by Resolution, the powerful new force in the market created in next to no time by Resolution’s self-made chief executive, Clive Cowdery. Fears that this new grouping could scoop the pool damaged market perceptions of F&C Asset Management, which will lose Resolution’s £22 billion fund management mandate as a result.

Across the Atlantic, the humiliation of the world’s largest insurer AIG over systematic long-term accounting irregularities has continued, with the final departure from the board of ex-boss Hank Greenberg and a guilty plea by John Houldsworth, ex-head of Warren Buffett’s Cologne Re to a charge of conspiring to mis-state AIG’s accounts.