Abbey was taken over by Spain's Grupo Santander in 2004

They are being bought by Resolution, a specialist company set up to buy funds, reduce running costs and profit from bigger economies of scale.

Businesses Abbey is selling include Scottish Mutual Assurance, Scottish Provident and Abbey National Life.

The deal will be the largest of its kind in the UK and is set to push Resolution into the FTSE 100.

'Good deal'

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

A life fund takes premiums paid into life assurance policies and invests them in a range of assets, such as equities, property, fixed interest securities and cash.

Customers opening a policy in a life fund are deemed to purchase units in the fund.

Abbey's chief executive Francisco Gomez-Roldan said the deal was good for the bank, its employees and its customers.

"We have sold our life businesses for an excellent price and ensured continuity of service and product," he said.

History

Abbey is keeping all its branch-based investment and asset management business.

Abbey was bought by Spain's Grupo Santander in 2004.

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