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Resolution aims to double UK infrastructure investment

Reuters - UK Focus

By Chris Vellacott

LONDON, Feb 14 (Reuters) - British insurer Resolution could double the funds it is setting aside to invest in UK infrastructure by the end of 2016, its finance director said.

The company, known to customers by the Friends Life brand, has already allocated 500 million pounds ($831.82 million) for power plant, road and port investments and will look at adding a similar amount once this is fully deployed, Resolution's Chief Financial Officer Tim Tookey told Reuters on Friday.

"We certainly would have an appetite to do more infrastructure, say another 500 million pounds," he said. "Timing would depend on the opportunities and (it) could easily be end-2016 before we could invest 1 billion pounds wisely."

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Many big insurers are eager to invest in infrastructure projects because they offer long-term, inflation-beating, regular returns from road tolls and rents which fit well with long-term liabilities on annuities sold to pensioners.

These products, exchanged for a client's pension pot accumulated through their working life, commit the insurer to paying an income until death, which can come decades later.

Resolution is one of six big UK insurers that pledged in December to invest 25 billion pounds in transport and energy projects over the next five years.

The others were Legal & General (LSE: LGEN.L - news) , Prudential (Frankfurt: PRU.F - news) , Aviva (Other OTC: AIVAF - news) , Standard Life (LSE: SL.L - news) , and Lloyds Banking (Xetra: LLD.DE - news) Group unit Scottish Widows.

Britain's government has made boosting private sector investment in infrastructure a priority as it grapples with crumbling and overcrowded roads, railways and airports while trying to curb public spending.

More than half of Resolution's current infrastructure funds have yet to be deployed. Its investments so far include a 75-million-pound loan facility to power company Drax Group Plc (LSE: DRX.L - news) , due to mature in June 2018 and backed by a government guarantee.