First quarter 2012 – Interim Management Statement


  • UK Life Project is in value delivery phase with good progress on financial targets;
  • The Group has delivered improved new business results in the three month period to 31 March 2012, with value of new business (“VNB”) increased to £35 million (31 March 2011: £19 million) and new business cash strain (“NBS”) reduced to £67 million (31 March 2011: £105 million):
    • UK VNB increased to £22 million (31 March 2011: £6 million) reflecting the increasing proportion of new business on the target platforms and ongoing actions to generate operating cost synergies;
    • UK NBS of £33 million (31 March 2011: £69 million) has improved from 2011 reflecting ongoing delivery of cost synergies in addition to the recognition of negative reserves on protection business from the second quarter of 2011;
    • International new business results remain depressed in the current economic environment with VNB down slightly at £9 million (31 March 2011: £10 million). NBS is marginally down to £28 million (31 March 2011: £29 million) as the focus of the business moves towards new business with lower strain;
    • Lombard delivered a good quarterly performance in what remain challenging conditions with VNB of £4 million (31 March 2011: £3 million), driven by a 29% increase in new business volumes. Sales of £44 million on an annual premium equivalent (“APE”) basis reflect an increased proportion of large cases in the period;
  • Run-rate synergies of £50 million achieved by 31 March 2012 progressing towards the £112 million run-rate target to be delivered by the end 2013, and £143 million run-rate synergies by the end of 2015;
  • Strong balance sheet maintained with an estimated Insurance Groups Capital Adequacy (“IGCA”) surplus at the Friends Life group (“FLG”) level of £1.9 billion (31 December 2011: £2.1 billion) reflecting the payment of a £250 million dividend up to Resolution Holdings (Guernsey) Limited in March 2012;
  • Group available shareholder cash (“ASC”) totalled £841 million (31 December 2011: £853 million) before payment of dividend to Resolution Limited shareholders and scheduled DCN repayment of £60 million; and
  • Total sales (on an annualised premium equivalent basis) in the first quarter of 2012 totalled £292 million up 8% on the £270 million reported in the same quarter in 2011.

Mike Biggs, Chairman of Resolution Limited said:

“The Board sees good progress on the delivery of the financial targets of the UK Life Project. The UK business is benefiting from the financial discipline brought to the acquired businesses.”


Investors / analysts
Neil Wesley, Resolution Operations LLP

+44 (0)20 3372 2928

Alex Child-Villiers, Temple Bar Advisory

+44 (0)7795 425 580

Forward-looking statements

This announcement may contain certain "forward-looking statements" with respect to certain of Resolution's (and its subsidiaries) plans and current goals and expectations relating to future financial condition, performance, results, strategy and objectives. Statements containing the words “believes”, “intends”, “expects”, “plans”, “seeks”, “aims”, “may”, “could”, “outlook”, “estimates” and “anticipates”, and words of similar meanings, are forward-looking statements. By their nature, all forward-looking statements involve risk and uncertainty. Accordingly, Resolution's (and its subsidiaries) actual future financial condition, performance or other indicated results may differ materially from those indicated in any forward-looking statement.

Any forward-looking statements contained in this announcement are made only as of the date hereof. Resolution undertakes no obligation to update the forward-looking statements contained in this announcement or any other forward-looking statements it may make.

No statement contained in this announcement should be construed as a profit forecast.


There will be a conference call today for wire services at 07.30 (BST) hosted by John Tiner, CEO of Resolution Operations LLP. Dial in telephone numbers: UK National 0871 700 0345, UK Standard International +44 (0) 1452 555 566 Conference ID: 77627008.


There will be a conference call today for analysts and investors at 08.30 (BST) hosted by John Tiner, CEO of Resolution Operations LLP. Dial in telephone numbers: UK National 0871 700 0345, UK Standard International +44 (0)1452 555 566, Conference ID: 77627759.

Financial calendar

Interim results 2012 15 August 2012
Third quarter 2012 interim management statement 15 November 2012

The financial information contained in this IMS is unaudited.

View the full Interim Management Statement - First quarter 2012