By David French and Carolyn Cohn
NEW YORK/LONDON (Reuters) - British insurance entrepreneur Clive Cowdery is raising money for a fourth investment vehicle, at the same time as his third, U.S.-focused fund is being wound down and its sole asset put up for sale, sources aware of the matter told Reuters.
Cowdery, founder of The Resolution Group, is one of UK insurance's biggest names, having spent more than a decade acquiring life insurance companies that were usually closed to new clients and then implementing cost savings to help bolster returns.
The new Bermuda-based fund will maintain the same focus by reinsuring closed-book businesses in the United States and Europe, according to two sources aware of the matter, who spoke on condition of anonymity as the information isn't public.
Jonathan Moss, chief financial officer of Aviva (LON:AV)'s French business, has been lined up to run the fund, one source added. Moss was chief executive of what is now Phoenix Group when it bought Cowdery's first Resolution fund in 2008.
The fund is looking for commitments from investors of a couple of billion dollars, a second source said.
A spokesman for Resolution declined to comment.
Moss did not respond to request for comment.
Life insurance and annuity businesses have been difficult areas for traditional insurance firms as they have struggled to make enough money to cover long-term payouts in the low interest rate environment. Many have chosen to sell these units to private equity and specialist firms such as Resolution.
Atlas Merchant Capital, led by former Barclays (LON:BARC) Chief Executive Bob Diamond, is close to buying Hartford Financial Services' annuity run-off business for as much as $3.5 billion (2.70 billion pounds), sources said last month, and Dutch insurer Aegon NV completed the sale of the majority of its U.S. run-off business, worth $14 billion (10.79 billion pounds), to Wilton Re in June.
UP FOR SALE
In Europe, Italian insurer Generali (MI:GASI) has put its 44 billion euro (39.85 billion pounds). German closed life insurance portfolio up for sale, sources told Reuters last month. British insurer Prudential said on Thursday it may sell part of its 45 billion pound closed annuity book.
Reinsurance is an alternative for sellers to offloading the businesses altogether.
Meanwhile, Cowdery's third fund, Resolution Life, is marketing Nebraska-based Lincoln Benefit Life to potential buyers as the fund is wound down, five sources aware of the matter said.
Initial bids were due in at the end of July, according to two sources, with the closed provider of life insurance and annuities expected to fetch in the region of $500 million (385.42 million pounds). Morgan Stanley (NYSE:MS) is advising Resolution Life.
There are questions over whether the company will ultimately be sold, with two of the sources noting Cowdery could choose to transfer ownership of Lincoln to his new fund if Resolution Life was unhappy with the tabled offers.
The aborted sale would then become a way for Cowdery to calculate an updated market value for the business, since it was bought from Allstate Corp (NYSE:ALL) in 2014 for $600 million (462.50 million pounds).
While a depreciation in the asset's value is to be expected, given no new policies are being written and existing ones are being managed to maturity, the fact most of the $2 billion of capital which Resolution Life had to deploy remains uninvested is likely to be a bone of contention with investors, two of the sources said.
Blackstone (NYSE:BX) and Prudential Financial (LON:PRU) are among the investors in Resolution Life, sources said. Blackstone declined to comment and Prudential Financial did not immediately respond to a request for comment.