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It is not what you know, it is who you know. But investors who like to follow individuals have a dilemma when it comes to Clive Cowdery. The life insurance entrepreneur has a mixed record, not to mention a lack of imagination on corporate names, when it comes to listed vehicles.
His first effort, Resolution PLC, was a great success. If you bought shares at 560 pence ($9) when it listed in 2005 (via a reverse takeover), you would have received 49 pence in dividends before the company was sold to Pearl for 720 pence per share in 2008. A 37 per cent return in two-and-a-half years is not too shabby.
Effort number two is Resolution Ltd, and has been less impressive. Total shareholder return has been 10 per cent since it listed in late 2008, with dividends cancelling out a one-fifth drop in the share price. The FTSE all-share has managed a total return of 100 per cent in the same period. Strategic uncertainty and governance concerns are to blame, but the company is turning things round. First-half results on Tuesday showed a 17 per cent jump in profits.
Discussion of Mr. Cowdery's record is of more than historic value. Effort number three – Resolution Life Holdings – is under way. Last month it made its first acquisition, with the $600-million (U.S.) purchase of Lincoln Benefit Life in the U.S. from Allstate Corp.. As with the other two, it is likely to try to consolidate a fragmented life insurance sector. As with the other two, it is likely to involve books that are no longer open to new business. And as with the other two, it might well go public at some stage.
To convince investors to back his American venture Mr. Cowdery will have to make it more like version one than two. That means a clear strategy, predictable cash flows and no repeat of the bizarre governance structure that was imposed on Resolution Ltd. Consolidating closed books of life insurance businesses ought to be profitable. Mr. Cowdery might well be worth another try.