29th Mar 2006 10:00
Resolution PLC29 March 2006 29 March 2006 Resolution plc buys back preference shares in Resolution Life Group Limited fromRoyal & Sun Alliance Insurance Group plc Resolution plc ("Resolution"), the largest specialist manager of UK closed lifefunds, announces that it has entered into an agreement with Royal & Sun AllianceInsurance Group plc ("R&SA") to purchase all the preference shares that R&SAowns in Resolution's subsidiary Resolution Life Group Limited ("RLG") for totalpayment of £100 million. The transaction is expected to complete on 31 March2006 and this will be reflected in Resolution's European Embedded Value ("EEV")at 31 December 2005. The payment will be funded from internal resources and will consist of thepayment of a dividend of £13.125 million in respect of the period from 30September 2004 to 31 March 2006 together with a cash consideration of £86.875million representing 87% of the par value of the preference shares. As part of the acquisition agreement, (i) the indemnity which R&SA had given toRLG in relation to potential mis-selling liabilities within the former R&SA lifecompanies acquired by RLG in September 2004 and (ii) non-tax warranties given atthe time of the sale of the former R&SA life companies will be cancelled. Thebest estimate reserves in respect of potential mis-selling liabilitiesunderlying the 30 June 2005 EEV restatement published by Resolution on 7 March2006 would not have resulted in any payment being due from R&SA under themis-selling indemnity. For further information, please contact: Resolution plcIan Maidens, Group Chief Actuary Tel: +44 (0)20 7489 4863Steve Riley, Investor Relations Director Tel: +44 (0)20 7489 4884 Temple Bar Advisory LimitedAlex Child-Villiers, Media Enquiries Tel: +44 (0)7795 425580 Notes to editors 1. RLG completed the acquisition of the former R&SA UK life operations on 30 September 2004 for a total consideration of £850m. The consideration comprised £750m cash together with £50m of 8.75% cash preference shares and £50m of 8.75% PIK preference shares. 2. As part of the terms of the transaction R&SA agreed to share the costs of increases in mis-selling liabilities in the former R&SA life companies if the costs of those liabilities exceeded an agreed level. This could have resulted in R&SA making cash payments to RLG, capped at £76m. This liability would have expired on 31 December 2009. 3. The acquisition agreement between R&SA and RLG contained customary warranties from R&SA in connection with the former R&SA life companies concerning, amongst other matters: accounts; material contracts; intellectual property rights; IT systems; anti-trust; compliance; actuarial matters; information relating to mis-selling; properties; environment; employees and pensions and other employee benefits. These warranties expire on 31 March 2006 and there are no known claims outstanding. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
RSA.L