FSA delays Pearl / Resolution merger

by Gill Montia

Story link: FSA delays Pearl / Resolution merger

The £5 billion acquisition of Resolution by Pearl Assurance has been delayed by three weeks by the Financial Services Authority (FSA), which has to approve the change of ownership of Resolution.

The terms of the merger of the UK’s two largest closed life funds consolidators were agreed late last year and include plans to free-up capital from Resolution’s life funds.

The FSA is now questioning whether policyholders will lose out because of the timing of the fund raising proposals.

Pearl is reported to still be fully committed to buying Resolution and has made it clear that the capital released will not be used to fund the acquisition.

Completion of the transaction was scheduled for the beginning of February but the FSA is obliged to protect the interests of policyholders and has therefore insisted on a delay.

The Authority has the power to impose conditions on either party or veto the merger altogether.

Pearl’s acquisition of Resolution was fiercely contested. Both Standard Life and Friends Provident were in the bidding but Pearl increased its stake in Resolution and emerged as the victor.

Friends Provident has since been forced to undertake a strategic review which has recommended the sale of part of the business and made the life insurer a takeover target.