Market recovery boosts Friends Provident owner

THE owner of life and pensions firm Friends Provident today said strong growth overseas and greater investor confidence at its Lombard wealth management business helped offset difficult conditions in the UK last year.
By The Newsroom
Published 24th Mar 2011, 10:26 BST

Buy-out firm Resolution, which acquired Friends Provident for £2 billion in 2009 in the first of a planned string of UK life takeovers, said it saw record sales at Lombard and its international arm in 2010.

This counteracted tough conditions for Friends in the corporate pensions and protection insurance markets, which have been hit as firms shed staff and amid a sluggish housing market.

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Pre-tax operating profits at Friends fell 12% to £116 million in 2010 despite tough action to cut costs at the division following its takeover.

But the wider Resolution business delivered £275 million in operating profits, up from £6 million in 2009, as it was boosted by the acquisition of Axa’s UK life and pensions arm for £2.75 billion in September. It also bought the Bupa Health Assurance business for £168 million in January.

Resolution is to rebrand its UK operation as Friends Life from the end of this month following the integration of the Axa and Bupa businesses.

Resolution, which was set up by insurance entrepreneur Clive Cowdery, said last month it was halting deals to concentrate on integrating its UK life acquisitions.

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It stressed today it is not ruling out any attractive opportunities, but believes it can achieve targets without snapping up more firms.

Resolution said it had seen the life and pensions market begin to revive after a tough few years.

It said: “During 2010 there was a recovery in financial markets and some reduction in volatility from the very high levels experienced in recent years, leading to improved market confidence.

“There have also been signs of growth in UK life insurance and pension markets. However, economic conditions remain challenging and uncertain, with extremely low levels of interest rates, volatile economic growth and insecure labour markets.”

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UK sales excluding the Axa business contribution fell 4% to £391 million in 2010, dragged lower by the Friends Provident performance.

However, the stock market improvements boosted investor confidence, which benefited its Lombard and international divisions, notching up sales hikes of 10% and 24% respectively.

Resolution now has 5 million customers in the UK.