Friends Provident extends timeframe for profits target

Life insurer Friends Provident today warned it would take longer than expected to achieve profits targets after a cooling housing market hit its mortgage protection business.

The company had aimed to make between £180m (€265m) and £200m (€295m) in new business profits from the UK in 2008, a target set last October.

But Friends said the “flat and competitive” mortgage protection market meant it would have to lengthen the timescale needed to achieve the goal.

Friends, which has announced a £8.6bn (€12.6bn) merger with closed life firm Resolution, delivered the news as it unveiled a 7% increase in underlying pre-tax profits to £264m (€389m) for the first half of 2007.

Housing sales are key to the mortgage protection business, but Friends also faces strong competition in a “fast-moving and price-sensitive market”.

Rival insurance firms including Pearl Assurance and Standard Life have been linked with possible moves to break up the deal.