October 18, 2018 / 11:38 AM / 25 days ago

Resolution's Cowdery has $2 bln life insurance deal in sight

* Cowdery changes strategy as deal opportunities pick up

* Resolution Life Group has global remit, can reinsure

* Plans to list in UK or U.S. in 3-5 years

* Aims to complete $2 bln deal by year-end

By Simon Jessop

LONDON, Oct 18 (Reuters) - UK life insurance entrepreneur Clive Cowdery, who pioneered the practice of buying up closed books in Britain and the U.S., has launched a new company as more assets come up for sale and hopes to close a $2 billion deal by the end of the year.

Insurers in many developed markets are saddled with large portfolios of old life insurance policies that crimp their growth as regulators demand capital is held against them, preventing the capital being used more efficiently.

These so-called closed books will honour existing policies but not generally issue new ones. Cowdery and others such as Swiss Re have been buying up portfolios of these policies in recent years.

Cowdery's dealmaking vehicle Resolution Plc and its various entities have bought around $20 billion of the $50 billion of assets sold by insurers to date, Cowdery said, more than any other single buyer.

He bought policies from the likes of RSA and AXA in Britain and rolled them into two companies before selling each one for around $8 billion. He is in the process of selling a U.S.-focused fund which bought a single business.

After a lull in dealmaking, due to low interest rates reducing the prices insurers might attract for their assets, Cowdery is back with his fourth venture - Resolution Life Group (RLG) - aiming to profit from an expected fresh wave of disposals.

The launch marks a change in strategy for Cowdery as RLG has the scope to acquire businesses in multiple countries and can reinsure old policies as well as take over rivals.

"There has been a sharp pick-up in the numbers of companies looking to sell," Cowdery told Reuters, citing the breaching of 3 percent in the U.S. 10-year Treasury Bill yield as a trigger.

In February, Standard Life Aberdeen sold its insurance business to Phoenix. Italy's Generali in July sold a majority stake in its German life company to private equity.

The future of Prudential's old books of business are also at the centre of its planned demerger, while analysts said the prospect of a new chief executive at Aviva could also see them decide to sell.

Soon after RLG was formed in September, the company reinsured $5.7 billion in annuities from U.S. company Symetra Life, owned by Japan's Sumitomo Life Insurance Company.

That maiden deal was backed by $1 billion in capital, to which RLG contributed an undisclosed amount and is the first step on a road to compete more broadly with global reinsurers including Swiss Re and Munich Re, Cowdery said.

Cowdery said he was now looking to buy a company which will cost around $2 billion, the bulk of the money RLG has already raised from investors, and he hopes to complete by the end of the year.

The Bermuda-based entrepreneur, who also backs political magazine Prospect, is seeking to grow the business to around $5 billion of assets before a stock market listing of the company in either Britain or the United States in 3-5 years.

As a company, RGL would have more freedom to invest than his previous ventures because it would have a permanent pool of shareholder equity to tap, rather than a fund with a finite life and stricter investment mandate, Cowdery said.

"The market has a few billion dollars worth of deals a year... you'd hope to deploy a minimum of a billion dollars a year thereafter, in the public markets. It's a long-term plan." (Additional reporting by Carolyn Cohn; Editing by Elaine Hardcastle)

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