Life insurer Resolution
Resolution doubled in size last year after merging with Britannic, creating Britain's biggest consolidator of closed life funds. It virtually doubled again this year when it bought the life insurance business of mortgage bank Abbey, propelling the insurer this week into the widely tracked FTSE 100 index.
Resolution said first half operating profit was 115.9 million pounds on a European embedded value basis (EEV), from a proforma 85.8 million pounds in the six months to the end of December last year. The consensus from eight analysts polled by the company had seen EEV operating profit at 110 million pounds.
EEV is a benchmark based on the worth of an insurer's assets and future profitability of its policies.
Under IFRS standards, operating profit was 163.6 million pounds, from a proforma 142.7 million in the second half of 2005.
Resolution will pay an interim dividend of 6.64 pence per share, up 15 percent, beating its target of 13 percent growth.
The insurer whose first half results do not include the Abbey deal completed this month said it was well advanced to meet its target of 38 million pounds per year of cost and asset management synergies after its merger with Britannic.
It said it was confident of delivering an internal rate of return of at least 16 percent from the acquisition of the Abbey businesses.
Over time we believe the UK life sector will go through further restructuring and consolidation, Chief Executive Paul Thompson said in a statement.
Resolution has the size, track record and profitability to play an active part in this consolidation.
Consolidation companies have bought billions of pounds of closed life funds in recent years with a view to using scale to cut the cost of running them.
Resolution said its embedded value which includes the present value of long term future business was 2.215 billion pounds against 2.14 billion at the end of last year, or 611 pence per share. Adjusted for the bonus element of the insurer's summer rights issue, that slips to 534 pence per share.
According to consensus forecasts supplied by the firm, its embedded value had been seen at 2.167 billion pounds.