* Sees extra costs of over 65 mln stg from IT overhaul
* Shares down 3.8 percent
LONDON Nov 7 British life insurer Resolution
is to absorb more than 65 million pounds ($103 million)
of extra costs from programmes to update its IT systems and
outsource back-office functions.
The cost overruns include 35 million pounds related to
adapting the computer systems of businesses that Resolution
bought from Axa in 2010 and 30 million pounds from
severing and transferring existing outsourcing contracts.
The insurer will take a further hit in the "low tens of
millions of pounds" from a review of two other IT programmes, it
said on Thursday.
"It is disappointing that it is costing a bit more, but we
are absolutely on track to deliver the benefits," chief
executive designate Andy Briggs told reporters.
Resolution shares were down 3.8 percent by 0915 GMT, making
the company the second-biggest faller in the FTSE 100 index
. The stock is down about 8 percent since the start of
the year, lagging a 27 percent rise in the FTSE life insurance
"Although these costs do not impact the cash generation
capability of Resolution, it is nevertheless disappointing given
we view cost management as a core competency," Barclays Capital
analysts wrote in a note.
Resolution was set up in 2008 by entrepreneur Clive Cowdery
to make money buying, merging and selling on underperforming
life insurers, but it failed to complete as many takeovers as
hoped because falling share prices deterred owners from doing
The company, which spent 4.7 billion pounds buying three
insurers including Friends Provident, called a halt to
acquisitions in August and said it would instead try to make
money for its investors by wringing savings out of existing
The cost increases will not affect Resolution's financial
targets or its ability to pay dividends, the company said,
adding that it had raised the total cost savings target at its
core British unit by 17 million pounds to 160 million pounds.
Resolution also said that its new-business profit rose 45
percent to 138 million pounds in the first nine months of the
year, with a strong performance in Britain offsetting a decline
at its overseas units.