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Daily Insurance Industry News
Wednesday 22nd of May 2019
November 1, 2007

Falling pension sales blight Resolution bid plans

by Gill Montia

Story link: Falling pension sales blight Resolution bid plans

Royal London, the mutual life company, may have to review its involvement in the takeover battle for Resolution, the closed life funds consolidator.

Questions are being raised as to whether Royal London can continue its support for Pearl Group’s bid for Resolution, because of a fall in new life and pension sales in the first nine months of 2007.

These have decreased by 1%, to £1.4 billion, in the face of strong competition for group pensions business.

According to, Mike Yardley, chief executive of Royal London, the company has refused to raise its commissions to compete with rivals for company pensions business.

As a result, in the nine months to the end of September 2007, Royal London recorded in a 14% year-on-year decrease in group pensions business, to £384 million.

Meanwhile, the insurer has agreed to provide Pearl with a £300 million subordinated loan to help fund the acquisition of Resolution.

Pearl Group is Resolutions largest shareholder and if successful in its bid, Royal London could acquire some of Resolution’s assets.

These including business sold under the Scottish Provident International brand, which is valued at £1.25 billion.

The Scottish Provident business may also include additional elements that could increase Royal London’s commitment to more than £2 billion.

 

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