Resolution (LSE: RSL) chairman admits shareholders will be "very disappointed".
Resolution (LSE: RSL) slumped 14p, or 6%, to 214p this morning after announcing the cancellation of a £250 million capital return. The payout, equivalent to 18p per share, had been originally scheduled for the first half of 2012.
The FTSE 100 (UKX) life assurer said the decision was based on the estimated capital position of the group at the end of June and followed "careful consideration" of the expected future capital requirements of its Friends Life subsidiary against "a backdrop of heightened investment, economic and regulatory uncertainty".
Mike Biggs, Resolution's chairman, quipped: "I understand that shareholders will be very disappointed." He also mentioned Friends Life had an Insurance Groups Capital Adequacy surplus of £1.9 billion and the wider group's dividend policy remained unchanged.
Assuming Resolution can maintain its current 19.9p per share ordinary dividend, the 214p shares would yield more than 9%.
However, a life assurer whose balance sheet and general progress seems extremely sensitive to economic volatility and regulatory actions might not be the most dependable dividend investment this choppy market has to offer right now.
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> Maynard does not own any share mentioned in this article.