Second approach puts HHG back in play

SHARES in finance group HHG surged to lifetime highs today after it said a rival may gatecrash Hugh Osmond's £1bn bid for its closed life insurance funds.

In a short statement today, HHG said it had received an approach from Resolution Life Group, the consolidator that has already landed two major deals in the past six months.

HHG's life funds include the insurance and pension books of Pearl, National Provident Life and London Life and have 2.3m policyholders.

Both parties refused to comment about the timing of the announcement, though industry insiders claimed it was related to a recent visit by a Resolution-appointed banker to HHG's offices.

The shares have been climbing steadily ever since Osmond, best known for his links to Pizza Express and Punch Taverns, sealed a recommended offer for the life funds in December. They closed at a record high of 65¾p yesterday, more than 33% up on the price before Osmond pounced, and rose 6p to 71¾p today.

HHG shareholders are due to vote on Osmond's offer on 21 February. Some £150bn of policyholders' money is tied up in closed funds - no longer open to new business - in the UK. Suitors are attracted by the stable cashflows and opportunities to boost the earnings of with-profit funds.

Resolution was formed last year, buying Royal & SunAlliance's UK life insurance arm in the summer and Swiss Life's closed UK division in December.