Cowdery in talks over sale of Axa

Insurance tycoon Clive Cowdery's Resolution is in talks to buy the bulk of French group Axa's British business in a £2.8bn deal to create one of the country's biggest life groups.

Talks have been going on for some time, but serious discussions began only a month ago. The cash would come from a £2.5bn rights issue by stock market-listed Resolution.

The price would be at discount to Axa's £3.5bn embedded value, a measure of the worth of insurance companies based on the market value of net assets plus future profits from existing policies.

Axa, which has ten million customers in Britain, has appointed Credit Suisse to sell the operation with Resolution, which is being advised by financial services firm Citigroup, thought to be frontrunner, although there are believed to be other potential buyers.

Resolution paid almost £2bn for Friends Provident last year and would combine the two businesses with huge costs savings but inevitable job losses.

Resolution said: 'The combination of the two businesses would create one of Britain's largest providers of protection products and group pensions services.'

Axa's British operations, which employ 11,000, include Axa Life, Axa Insurance, Axa PPP Healthcare and Axa Ireland. It is understood the French insurance giant is keen to offload the business to focus on areas such as fast-growing Asia.

The deal would be another example of Cowdery, who has made a £100m-plus fortune, taking advantage of distressed assets and life insurance companies that have been hit by the economic downturn to buy at a discounted price.

Although Axa is a large deal, it is thought Cowdery, who has repeatedly been linked with a move on Prudential's British arm, has a further massive acquisition in his sights.

Resolution has a target of creating a group with £10bn of embedded value by the first quarter of 2011, suggesting the next deal would be even bigger than Axa.

Axa, which declined to comment, is Britain's fifth-biggest new business writer, after Standard Life, Aviva, Aegon and Legal & General.