Resolution grows with £165m Bupa Health Assurance deal

Resolution's drive to consolidate the insurance market continued apace today when it snapped up Bupa Health Assurance in a £165 million deal.

The takeover vehicle, set up by Clive Cowdery and run by former Financial Services Authority chief John Tiner, has already bought Friends Provident for £1.9 billion and Axa's UK arm for £2.75 billion.

Today's deal was described by analysts as a "bolt-on rather than a game-changer". The business will eventually be merged with the Friends arm, though will initially be run as a stand-alone operation. It consists of Bupa's income protection, life assurance and critical illness cover lines.

Resolution said it is funding the purchase using "surplus capital" on the Friends balance sheet. Bupa says it is selling in order to refocus on healthcare services.

Tiner said Resolution and Bupa are talking about selling each other's products but discussions are at an early stage. He insisted that the relatively small size of the deal does not mean that bigger targets are off the agenda.

Resolution is often rumoured to be plotting truly ambitious bids, such as a strike for Prudential's UK business or parts of Aviva.

Shore Capital's Eamonn Flanagan said: "This is a useful bolt-on deal for Resolution, which considerably improves its positioning in the group risk market and consolidating its position in the individual risk market."

Goldman Sachs said in a note that Resolution needs another large deal of towards £3 billion to hit its target of £10 billion embedded value.