Firm seeks new friends for profit

Mar 12 2008 by Eryl Jones, Western Mail

FRIENDS Provident pledged a renewed focus on protection and group pensions yesterday after revealing profits dived to £16m in 2007.

The decline from the £509m reported in 2006 had been expected after the company wrote-off £440m through accounting changes and because of customers cashing in policies earlier than expected.

It recently announced plans to down-size and focus on its “established strengths” in group pensions and protection business, while selling its majority stake in investment group F&C Asset Management and other non-core operations.

The company said the “swift and efficient” implementation of the new strategy was now its focus and that it would provide a further update in August.

It said yesterday, “The new strategy is designed to address the poor underlying economics of trading by elevating profit above volume growth.”

In protection, Friends said it will seek to at least maintain market share and to continue to enter new segments. Volumes of new pensions business will fall as a result of a more selective approach, but Friends said the quality of new business will increase.

As well as pensions and protection, including mortgage-based products, Friends has operations in annuities, savings and investments.

Despite yesterday’s update, the company’s strategy may be taken out of its hands if New York-based private equity group JC Flowers decides to launch an offer.

Flowers had been mulling a proposal worth £4bn in January, but reports at the weekend suggested a figure closer to £3.5bn was now more realistic after a fall in the insurer’s share price.