The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Hybrid capital: Resolution found in life closed business

Resolution becomes a new type of insurance participant in the Tier 1 hybrid insurance capital sector.

Resolution last month issued the largest Tier 1 deal ever from a UK insurance company, highly impressive for a debut name, but it is the distinctive nature of Resolution’s business model that sets it apart from other insurance capital transactions.

JPMorgan and Lehman Brothers structured the deal and jointly acted as bookrunners alongside RBS. “The £500 million proceeds will be used to refinance loans taken on for the Royal Sun Alliance Life and Swiss Life UK acquisitions made by Resolution Life Group last year,” says Tom Keatinge, head of insurance DCM at JPMorgan.

“Resolution is a new animal, a genuinely unique idea,” says Keatinge. Resolution operates almost like a workout firm. It goes around buying up all closed life insurance funds from forced sellers in the UK. Cashflows to service bond coupons and principal payments will only be forthcoming if the company manages to extract value from the closed life business it has purchased.

“These businesses do throw off pretty material cashflows over time,” says Eamonn Price, head of European debt capital markets at Lehman Brothers.

According to the FSA, there is around £160 billion worth of assets under management backing closed life businesses.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree