Insurance dealmaker Cowdery sets sights on European and US ventures

LONDON, March 18 Tue Mar 18, 2014 9:57am EDT

LONDON, March 18 (Reuters) - British insurance entrepreneur Clive Cowdery is looking to Europe and the United States as markets where he can replicate his model of mopping up life assurers as he stepped down from the UK-focused Resolution vehicle he founded.

Speaking to Reuters after announcing a U.S. Resolution Life vehicle with a $2 billion war chest on the brink of completing its first acquisition, Cowdery said he already has teams on the ground in Europe.

Cowdery's business model involves buying up life insurance companies that were usually closed to new clients and merging them to make tax and operational savings.

These funds pay out to pensioners and over time their liabilities reduce so the amount of capital they need to hold also drops, freeing up cash that can be returned to investors.

His Resolution venture in Britain said on Tuesday it was to drop the name, associated with Cowdery's buying sprees, and apply its Friends Life brand to the listed entity.

Cowdery is stepping down from the board to pursue his international ambitions.

"The UK market is consolidated, it's done," he said, noting that his ventures had snapped up around a third of the British market over 10 years.

His Resolution Group holding company said on Tuesday its U.S. venture Resolution Life, set up last year, is about to close its first deal, buying Nebraska domiciled Lincoln Benefit Life from Allstate Corporation for around $600 million.

The United States, like the UK before it, has too many insurance companies, he said, with around 940 owned by around 400 holding companies.

"It's a big country, but I think that's overdoing it," he said.

Cowdery also expects the $2 billion the United States to fund the first three acquisitions and he plans a share listing there to raise more.

"Two billion in a country the size of America is really just a way to get going. At some point we'll go public as a way of raising even more," he said.

At the same time, he has teams in Europe setting up a similar venture, most likely to be headquartered in London, intending to seize the opportunity to consolidate across borders created by the introduction of a common European capital standard for insurers.

The European Union is introducing a set of capital rules dictating how much money insurers must hold against their risks, known as Solvency II, from 2016.

This, Cowdery believes, will impose capital requirements that may prove too onerous for some small insurers to operate profitably.

But the fact that a single standard will operate across the entire bloc makes a continent-wide consolidation viable for the first time.

"Capital rules until today have been different in each country and therefore you could never really get critical mass," he said, adding that he could start raising money from investors for the venture "towards the end of this year."

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