* Buying Bupa unit for net 102 mln stg ($164 mln)
* Purchase to boost earnings, generate cost savings
* Resolution says seeking further acquisitions
(Adds further detail, analyst's reaction, updates share price)
By Myles Neligan and Sudip Kar-Gupta
LONDON, Oct 15 (Reuters) - Insurance buyout specialist Resolution is to buy part of British health insurer Bupa for 102 million pounds ($164 million), it said on Friday, in a self-financed deal aimed at broadening its product range.
Resolution, which paid 2.75 billion pounds for most of Axa's British arm in June, and bought Friends Provident for 1.8 billion pounds last year, is now buying Bupa Health Assurance, funding the deal with its own surplus capital.
The company, which aims to build a life insurer with an embedded value of 10 billion pounds before selling or floating it in 2012, remains on the lookout for large and small acquisitions, chief executive John Tiner told reporters.
"You can look at it and say this does not really move the needle, which is definitely true," said Berenberg Bank analyst Trevor Moss.
"However, it is an attractively priced acquisition in a product area they're wanting to gain more exposure to."
Buying BHA will allow Resolution's Friends Provident unit to offer employee life insurance, income protection and critical illness cover alongside its corporate pensions packages.
Resolution shares closed 0.8 percent higher at 253 pence, outperforming the FTSE 100 share index, which settled 0.6 percent lower.
The stock has lost 26 percent of its value since the beginning of the year on concerns it could launch a big rights issue to fund future acquisitions, making it one of the worst-performing in the Stoxx 600 European insurance sector index.
Citigroup analyst Raghu Hariharan said the BHA acquisition's small size was a clear signal that investor dilution is a significant consideration for future deals.
BHA has an embedded value -- net assets plus the present value of future earnings from existing policies -- of 228 million pounds, compared with Resolution's 6 billion pounds.
Resolution said the deal would boost its earnings and also deliver unspecified cost savings. ($1=.6253 pounds) (Editing by Greg Mahlich)