Consolidation vehicle Resolution has paid £165m to acquire Bupa Health Assurance (BHA) using surplus capital from its last acquisition, Friends Provident.
The cash will be raised from Friends Provident's life operating business.
Managing director of BHA Stephen Payne will answer directly to Friends Provident chief executive Trevor Matthews, but BHA will be run as a stand-alone business within the Friends Provident group for a maximum of one year.
The buyout is a bid by Friends Provident to expand into the income protection market, having market shares in corporate pensions and individual protection.
Following the acquisition, Friends Provident says it will offer group life, group income protection and group critical illness products.
"This transaction is entirely consistent with Resolution's strategy," says Michael Biggs, chairman of Resolution.
"Both the terms of the transaction and the synergies to be gained from it will create value for shareholders.
"It will also enhance Friends's proposition as a focused and disciplined writer of new business in key product areas."
At the end of 2009 BHA reported group assets of £309m.
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