UPDATE 4-Resolution closing in on $4 billion AXA deal

* To fund deal via 2 billion pound rights issue

* Resolution aims to complete deal by end-June

* AXA shares up 3.5 percent; Resolution shares suspended (Adds more detail, analyst comment, updates shares)

By Myles Neligan and James Regan

LONDON/PARIS, June 14 (Reuters) - Resolution (RSL.L) said it was close to buying AXA's (AXAF.PA) British life insurance arm, kick-starting its plan to consolidate the British life market and freeing the French insurer to focus on high-growth Asia.

Resolution, set up in 2008 to buy and profitably merge slow-growing British life insurers, said on Monday it hoped to complete the 2.75 billion pounds ($4 billion) deal by end-June.

The deal, to be part-funded by a 2 billion pounds cash call, would be Resolution's second takeover after its acquisition of Friends Provident last year, easing concerns about the slow pace of its consolidation project to date.

"This move will take some pressure off Resolution's management, who having targeted two or three acquisitions this year have so far not announced any," Oriel Securities analyst Marcus Barnard wrote in a note.

For AXA the British disposal will give it more scope to pursue takeovers in Asia, where Europe's second-biggest insurer has been striving to boost its presence as part of a plan to triple the profits it generates in emerging markets by 2015.

"It leaves them well-placed to take advantage of assets as and when they come up for sale," said James Shuck, an analyst at brokerage Jefferies. "They've got scope to do a 1 to 3 billion euros acquisition with no extra financing involved." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Reuters Breakingviews column on [ID:nLDE65D0HC] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

EASTERN PROMISE

European and U.S. insurers are keen to increase their exposure to Asia as robust economic growth fosters an emerging middle class with strong appetite for financial services.

AXA, one of Asia's largest foreign-owned insurers, is seen as a potential bidder for businesses that could be sold by regional rivals ING (ING.AS) and AIA to repay government bailouts received at the height of the crisis.

Under the Resolution deal, AXA plans to buy back 900 million euros of shares in its majority-owned AXA Asia-Pacific unit currently held by its UK life division, bringing it a step closer to owning the Asian arm outright.

AXA has for eight months been trying to buy out the Asian unit's minority investors, seen as a potential obstacle to its takeover ambitions in the region, but the attempt has stalled because of regulatory concerns over a related disposal in Australia. [ID:nLDE6581I5]

AXA said the deal with Resolution would result in a one-off writedown of 1.4 billion euros ($1.7 billion) in 2010, but would generate net cash proceeds of 1.7 billion while also boosting its capital strength.

AXA shares were up 3.5 percent at 13.4 euros by 1525 GMT, still down about 18 percent this year partly due to investor concerns over the company's capital reserves.

Under the deal, AXA would sell its British protection, annuities and group pensions units to Resolution, but would keep its more profitable and less capital-intensive wealth management and direct protection operations.

"It's sensible," said WestLB's Andreas Schaefer. "In my view it's one of the least attractive (markets) in Europe, margins are rather low and overall growth is not really sufficient."

Yet analysts at Keefe Bruyette & Woods said Resolution was offering a "rather full" price of one times the AXA units' embedded value, compared with an average 0.9 times at which British life insurers trade.

Resolution flagged significant cost savings from combining the AXA units with Friends Provident and said the merger would create one of Britain's biggest providers of protection insurance and group pensions.

Resolution, founded by insurance tycoon Clive Cowdery, has set itself a target of buying at least three life insurers before selling or floating the combined business in 2012.

The company said last year it had identified 25 potential targets. Earlier this year it was reported to have held fruitless talks on buying the UK arm of Prudential Plc (PRU.L).

Resolution shares were suspended pending the outcome of the deal talks as the purchase of AXA's UK units would be classified as a reverse takeover under stock market rules.

AXA was advised by investment bank Credit Suisse. (Additional reporting by Lionel Laurent in Paris; Editing by Mike Nesbit and David Holmes) ($1=.6865 pounds) ($1=.8203 euros)