Friends Provident gains European foothold with £183m Lombard buy

Friends Provident, the FTSE 100 life insurance company, took its first important steps into mainland Europe yesterday by snapping up Lombard International, a high net worth wealth manager, for an initial sum of €265m (£183m).

Friends Provident, the FTSE 100 life insurance company, took its first important steps into mainland Europe yesterday by snapping up Lombard International, a high net worth wealth manager, for an initial sum of €265m (£183m).

The all-share deal will increase the group's non-UK earnings to about 30 per cent of business, and will provide a foothold for expansion in the EU.

Keith Satchell, Friends Provident's chief executive, said the deal would be likely to put an end to the group's acquisitive streak, with the company now set to focus on a more organic growth strategy going forward.

"We always remain alert," he said. "But this fulfils a target we had of getting around 30 per cent of our new business income outside of the UK. We believe we can push it on quite sharply from here, and there's a lot to play for in the UK, and we don't want to be distracted from that task."

He added that the company was not interested in trying to get a bigger foothold in Europe through a large acquisition. "We haven't got the balance sheet to buy big organisations in France, Germany and Spain," he said. "And it's pointless buying small companies in these places, because small companies are struggling everywhere, not just in the UK."

Aberdeen Asset Management was an indirect winner, agreeing to sell its 15 per cent stake in Lombard as part of the deal. It is locked into holding the Friends Provident shares it will receive until next April.

As well as unveiling its latest acquisition, Friends Provident also published its third-quarter results yesterday, revealing an overall decline in new business. Total annual premium equivalent - the standard measure of life insurer's new business - was down more than 2.5 per cent on the same period last year, to £111m, principally because of a fall in group pensions business.

Mr Satchell said the poor performance in group pensions was due largely to its acquisition of F&C Asset Management earlier this year, which had automatically led employee benefit consultants to put the company on hold for new business until the deal is bedded down. He added that the third quarter of last year, which was strong for the group, made for a particularly challenging comparison.

The group's life business was up 5.7 per cent compared with the same quarter last year.