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Resolution Beats First-Half Profit Estimates on U.K. Unit

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Aug. 13 (Bloomberg) -- Resolution Ltd., the British insurance-buyout firm, reported first-half profit that beat analyst estimates, boosted by new business at its U.K. division.

Operating profit climbed 17 percent to 191 million pounds ($295.3 million) from a year earlier, the London-based company said in a statement. That beat the 180 million-pound estimate of 17 analysts surveyed by the company. The value of new business at its U.K. unit jumped 41 percent.

Resolution scrapped its acquisition strategy to focus on generating cash from previous three purchases -- Friends Provident, Axa U.K. Life and Bupa Health Assurance -- while strengthening its pension business to benefit from the U.K.’s auto-enrollment legislation, which compels firms to offer employees a retirement plan. The value of new business for corporate benefits rose 30 percent in the first half.

“Resolution is at an inflection point,” Gordon Aitken, a London-based analyst at RBC Capital Markets with an outperform rating on the stock, wrote in a note to clients. “As the U.K.’s second-largest corporate pensions writer, it is well placed to benefit from the asset shifts we expect in the U.K.”

The shares rose as much as 5.8 percent, touching the highest since January 2010. It closed at 329.50 pence, up 1.8 percent, extending this year’s advance to 33 percent.

The value of new business at the U.K. division climbed to 89 million pounds from a year ago, putting the company “well on course” to meet a target of 155 million pounds for 2013, it said. Sustainable free surplus, a driver of cash generation, rose 23 percent to 147 million pounds.

The company said it achieved 154 million pounds in cost savings by the end of June, meeting 96 percent of its 2015 target. It will pay a first-half dividend of 7.05 pence, in line with a year earlier.

“We are spending less and getting more for it,” said Chief Executive Officer Andy Briggs on a call with reporters. “Our strategic outlook is attractive. Our strategy is leading to ever stronger financial results with cash generation taking a further significant step forward.”

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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