Resolution Ltd., the insurance buyout firm founded by Clive Cowdery, fell in London trading after scrapping plans to return 250 million pounds ($392 million) to shareholders.
The decision was driven by economic and regulatory uncertainty and followed “careful consideration” of the capital requirements of Friends Life, its life insurance unit, Resolution said today in a statement.
Founded in 2008 to buy, merge and eventually sell U.K. life insurers, Resolution spent 250 million pounds buying back shares in the second half of 2011 and had planned to return the same amount to investors in the first half of this year following regulatory approval.
“We had assumed some limited prospect of cash return late in 2012 or in 2013,” Oliver Steel, a London-based analyst at Deutsche Bank AG with a buy rating on the stock, wrote in a note to clients today. “The statement also suggests that there is no prospect of cash return ever.”
Alex Child-Villiers, a spokesman for Resolution, declined to comment on Steel’s note.
Resolution fell 5.4 percent to 215.5 pence in London trading, valuing the firm at about 3 billion pounds.
The stock is down almost 44 percent since it began trading in 2008 and has lost 14.3 percent this year, as turmoil in the euro region and low interest rates hurt investment returns and increase the volatility of insurers’ capital reserves.
“I understand that shareholders will be very disappointed that the board has concluded not to return a second 250 million pounds of capital,” Chairman Mike Biggs said in the statement. “It would be inappropriate to do so against the backdrop of heightened investment, economic and regulatory uncertainty.”