Friends reveals profits slump

Friends Provident pledged a renewed focus on protection and group pensions today after revealing profits dived to just £16m (€21m) in 2007.

The decline from the £509m (€665m) reported in 2006 had been expected after the company wrote-off £440m (€575m) through accounting changes and because of customers cashing in policies earlier than expected.

It recently announced plans to down-size and focus on its “established strengths” in group pensions and protection business, while selling its majority stake in investment group F&C Asset Management and other non-core operations.

The company said the “swift and efficient” implementation of the new strategy was now its focus and that it would provide a further update in August.

It said today: “The new strategy is designed to address the poor underlying economics of trading by elevating profit above volume growth.”

In protection, Friends said it will seek to at least maintain market share and to continue to enter new segments. Volumes of new pensions business will fall as a consequence of a more selective approach, but Friends said the quality of new business written will increase.

As well as pensions and protection, including mortgage-based products, Friends has operations in annuities and savings and investments.

Despite today’s update, the company’s strategy may be taken out of its hands if New York-based private equity group JC Flowers decides to launch an offer.