Resolution is going to pay 3.6bn for the privilege of collecting and investing their premiums, along with the chance to sell more policies in the coming years.

Around 2.7m current policies with a collective value of 24bn are being
taken over by Resolution.

Among them are policies that have been sold in the names of Scottish Provident and Scottish Mutual, which the Abbey took over in 2001 and 2002.

Resolution says the much enlarged company is “committed to treating its customers fairly and will continue to take the positive steps that Resolution has been taking to improve the provision of information to its policyholders.”

Tom McPhail of stockbrokers Hargreaves Lansdown says this is not an idle promise.

He has been impressed with Automobile finance insurance
attitude to essential est finance hill in insurance investment irwin mcgraw real series
and disclosure since it took over the life insurance fund of the Royal & Sun Alliance group in 2004.

“They’ve gone out of their way to estate finance hill in insurance investment irwin mcgraw real series
on asset mix and bonus rates,” he said.

“I’ve been impressed with the handling of the R&SA so this should be quite good news.”

Who are they?

If anyone with an Abbey policy has not yet heard of Resolution, that is probably because it is a very new company.

It was set up in 2004 to buy the closed life funds of other insurance companies and make a profit while gradually running them down as policies matured.

Many insurers have found the export finance and insurance
business rather difficult in the last few years.

They were caught out by the huge stock market slump at the start of this decade, and more onerous regulatory and investment requirements.

They have also seen new business dry up, mainly thanks to the widespread avoidance of endowment mortgage policies in the wake of the mis-selling of this particular type of investment.

One wag has dubbed Resolution the Womble of the insurance industry, going around buying up other people’s rubbish.

But by managing the money with the advantage of economies of scale, Resolution hopes to prosper.

So far it is solvent, makes a profit and conforms to all the regulatory requirements of the Financial Services Authority.

As the FSA pointed out to consumers when Resolution took over the R&SA funds, the change should make no difference to the outcome of individual policies, nor should it affect pension pay-outs.

Investment returns

Thanks to taking over or merging with other companies, such as the Britannic group last year, Resolution has become very big and will soon have seven million customers and 63bn in assets to manage.

Now, with the Abbey deal, it will also sell new polices, either through the Abbey branches or through independent financial advisers.

In time, it is possible that investment returns may improve for Abbey policy holders.

Currently the Abbey funds have only 38% of their money in shares, with the rest invested in bonds or held in cash.

That is a rather cautious portfolio by conventional standards.

As a result, Tom McPhail describes returns on the Abbey’s finance home insurance personal tesco life fund as “pretty awful, below average.”

He is not expecting any short term change, but reckons that Abbey investors could benefit if Resolution adopts a more adventurous investment policy in the longer term.

“If they liberate economies of scale it may well put them in a position to improve the asset mix of the fund - so things could improve for investors” he said.

Given the difficult recent history of the UK insurance industry, that would come as a relief to many policy-holders.