Investors slam Resolution in damning report

 
David Hellier
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RESOLUTION chief executive Clive Cowdery has lost friends in the City and current shareholders may be reluctant to back him in new ventures, according to views canvassed by Deutsche Bank, one of the banks most respected in the insurance sector.

The feedback is part of a presentation to senior members of the insurance group earlier this month from Deutsche Bank’s team.

One UK long fund says the following: “They did themselves quite a lot of damage with the £250m capital return which didn’t get delivered. It’s not clear why it was postponed and you start to get really worried about some of the possibilities.”

Another institution says, according to documents seen by City A.M.: “I must say I am getting bored with the rhetoric on this and would much prefer to see some action. I struggle to see how financial engineering between splitting the back book and the front book is really going to create value.” The institution adds: “They won’t be getting any support from us for new vehicles until this one is finished.”

Deutsche has a top-class reputation in the sector and in Mike Lamb has one of the industry’s top corporate financiers. It does not advise Resolution, whose brokers are RBC and Barclays.

Resolution yesterday said some of the views canvassed by the bank did not reflect its own view of how it is perceived in the City, adding that it did not commission the feedback. City A.M. has not seen all the feedback, some of which may well be positive.
Earlier this year Resolution disappointed many by failing to deliver on a £250m return of capital. At the time it said: “What we are doing in the first half of this year is to study whether that capital can continue to come back to shareholders bearing in mind market volatility.”

Another institution, again described as a UK long fund, says: "I am not convinced by this front and back book split. It seems a bit gimmicky to me."

The documents in the hands of City A.M. have the logos of F&C Investments, Kames Capital, Moore Capital Management, Morgan Stanley and Shroders on every page, suggesting these were some of the institutions interviewed about their opinions of Resolution.

Earlier this week shares in Resolution rose on suggestions that it might restart negotiations to buy out its rival Phoenix. Talks between the two broke down last year.thecas optimus fortiter imputat aegre fragilis oratori, quod lascivius ossifragi deciperet s

What investors think of Cowdery’s strategy at Resolution

"I am not convinced by this front and back book split. It seems a bit gimmicky to me."

"The Resolution corporate structure is wrong and the board structure is wrong. They are paying Clive and the team to do M&A and chase after fresh products where the shareholders have no appetite to back Clive on M&A."

"They did themselves quite a lot of damage with the £250m capital return which didn't get delivered. It's not clear why it was postponed and you can start to get really worried about some of the possibilities. Is the FSA making them hold more capital?"

"I must say I am getting bored with the rhetoric on this and would much prefer to see some action. I struggle to see how financial engineering between splitting the back book and the front book is really going to create value... ...They won’t be getting any support from us for new vehicles until this one is finished."