Resolution shares drop after cancelling investor payment

Shares in Resolution Limited have dropped 9% after it cancelled plans to give £250m back to shareholders.

Investors had been due to receive the second instalment of a £500m handout in the second half of 2012.

Resolution was created in 2008 to buy and merge underperforming life insurance firms.

It decided to cancel the payment after considering the future capital requirements of its British life insurance business, Friends Life Group.

"I understand that shareholders will be very disappointed that the board has concluded not to return a second £250m of capital," said chairman Mike Biggs.

"But it would be inappropriate to do so against the backdrop of heightened investment, economic and regulatory uncertainty."

The group added that its capital position was "robust".

It said it would provide a detailed update on its cash and capital position with its interim results on 15 August.