Closed life funds held by Abbey could be sold

The mortgage specialist is in exclusive talks with Resolution to sell off its life fund assets for a reported �4bn.

Poor stock market returns and heavy regulation has led to many of Britain's life funds being shut to new business.

Specialist companies such as Resolution have been set up to buy funds at a discount, reduce running costs and profit from bigger economies of scale.

It is understood the acquisition would feature open and closed funds, including those held by Scottish Provident, Scottish Mutual and Abbey National Life.

The Times reported Resolution could pay �4bn to acquire the assets which had an "embedded value" of �3.68bn, but Resolution said it could not confirm the figures.

Abbey, formerly known in the UK as the Abbey National Building Society, was bought by Spain's Grupo Santander in 2004.

'Do a deal'

Resolution said that any deal would be funded by a mix of equity and debt.

If it went ahead, it would be the largest of its kind in the UK, and would rocket Resolution into the FTSE 100.

It has regularly said it is well-positioned to lead further consolidation of life funds, and news of the Abbey talks sent its shares up almost 7%.

Man Securities analyst Peter Eliot said Resolution was standing ready to do a deal.

"It would be very positive," he said. "It's what the company was put in place to do."

Resolution was formed last year when Resolution Life Group merged with Britannic Group in a �1.8bn deal.

It is led by executive chairman Clive Cowdrey who - according to the 2005 Sunday Times Rich List - has an estimated personal fortune of �70m.

A life fund invests premiums from life assurance policies - often in equities, property, fixed interest securities and cash.