Shares in UK life insurance and asset management group Resolution dropped sharply on Friday morning after the group cancelled the cash return of 250m pounds set for the first half of 2012 due to 'uncertainty' in the markets.
The group said that the decision was based on its estimated capital position as at the end of June after working out the expected future capital requirements of Friends Life Group "against a backdrop of heightened investment, economic and regulatory uncertainty."
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This was part of the £500m cash return announced in June 2011, of which £250m was already distributed by an on-market share buy-back that same month.
Resolution assured that its capital position remains "robust", with Friends Life having an estimated Insurance Group Capital Adequacy (IGCA) surplus of £1.9bn at June 30th. Furthermore, the group's dividend policy remains unchanged.
"I understand that shareholders will be very disappointed that the Board has concluded not to return a second £250m of capital but it would be inappropriate to do so against the backdrop of heightened investment, economic and regulatory uncertainty," said Chairman Mike Biggs.
The group said it will provide more details about its cash and capital position with its interim results next month.
BC
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