Friends Prov helped by UK pensions and overseas sales

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The Independent Online

Friends Provident, the FTSE 100 life insurance group, reported a stronger-than-expected 41 per cent rise in first-quarter sales yesterday, sending its shares up more than 4 per cent, and making it the day's fastest riser in the index of leading UK blue-chip stocks.

Friends Provident, the FTSE 100 life insurance group, reported a stronger-than-expected 41 per cent rise in first-quarter sales yesterday, sending its shares up more than 4 per cent, and making it the day's fastest riser in the index of leading UK blue-chip stocks.

The biggest boost to group sales came from its international business, which more than doubled with the inclusion of Lombard International, the Luxembourg-based company, on its books for the first time. Friends bought Lombard for £183m in October, and it contributed £19m in new business during the first quarter.

Overall, group sales came in at £129m - on an annual premium equivalent basis - well above analyst consensus forecasts of £120m. In the UK, Friends' sales were up by 20 per cent to £88m, driven by strong increases in group pension and protection sales.

The group pointed out it was unlikely to sustain such fast growth throughout the year. It said its group pensions sales had been boosted by a couple of large contract wins.

Philip Moore, the group finance director, said that while the group pensions business had been doing well through the independent financial adviser channel, the company was struggling in the employee benefit consultant sector. Sales have fallen in this area over the past nine months since the takeover of F&C by its fund management arm, Isis.

The instability caused by the merger led many consultants to put Friends Provident on hold.

Mr Moore said he hoped changes to the UK distribution regulations, which will allow financial advisers to tie to more than one company, would begin to benefit the company's sales by the end of this year.

Friends has secured places on the panels of several large financial adviser networks, and has been selected as one of Barclays bank's partners. The two largest financial adviser networks, Sesame and Bankhall, have yet to announce who they are to tie to.

Ben Gunn, the chief executive of Friends' life and pensions arm, said: "We have achieved healthy growth in the UK, especially in group pensions, where strong volumes from independent financial advisers have more than offset subdued production from the employee benefit consultants sector.

"These are excellent first-quarter results but, due to the seasonality of the Lombard business and the less predictable flow of UK pensions business, they should not necessarily be taken as a guide for the year. We continue to expect to grow our international businesses and to increase market share in the UK in 2005."

Shares in Friends rose 6.5p 167p, giving the company a market capitalisation of £3.57bn.

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