Pensions reforms help to boost Friends Provident

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The Independent Online

Friends Provident yesterday caught the stock market by surprise with sales figures showing it has benefited from pension reforms to a much greater extent than investors had previously realised. The insurer's sales of life and pensions products during the third quarter were 40 per cent higher than in the same period last year, with sales for the year to date up by 39 per cent.

Its shares rose by 6.7 per cent to close at 207p, a 13p gain on the day.

Friends' total new business rose to £4.63bn during the first nine months of the year, up from £3.33bn in 2005. In the UK, Friends has captured an increasing market share of both individual and group pension business since the introduction in April of tax reforms designed to encourage people to save more. Total UK business rose 34 per cent to £3.04bn during the first nine months.

Friends' international businesses also posted major advances. In particular, Lombard International grew its sales 68 per cent to £955m over the first nine months, with a particularly good result in Italy.

Ben Gunn, the chief executive of Friends Provident Life & Pensions, said the market's favourable reaction to the results had partly been due to a presentation given to analysts on the insurer's cash reserves.

Friends was disappointed by the lacklustre reaction to a strong set of interim results announced in July and yesterday sought to reassure analysts its growth and dividend policies were sustainable. "That unleashed the full value of the sales figures," Mr Gunn said.

He also confirmed Friends would continue to seek to grow organically, rather than by takeovers. "We have no obvious holes we want to fill."

Mikir Shah, an analyst at the broker Fox-Pitt, Kelton, said: "The new business profit growth outlook is very positive indeed," he said. "Both the UK and international are doing very well."

Friends has also tried to reassure investors about its senior management in recent weeks by hiring Alliance Boots's Jim Smart as finance director to replace Philip Moore. Mr Moore is due to take over from the chief executive, Keith Satchell, in January.