Friends Provident shares rise after results

Shares in life assurer Friends Provident Plc jumped yesterday after the group reported a rise in third quarter sales and said that it was well placed despite volatile market conditions.

The group said sales of life savings and pension products rose 7% to 142 million on an annual premium equivalent basis - a standard measure used to iron out short-term volatility.

The result boosted Friends shares by over 8% and gave some relief to an insurance sector that has been hammered this year by the stock market slump. Rival Britannic added 4.8% and Legal & General rose 2.9%.

“Their growth prospects do look reasonable, even though the overall savings market remains dull,” said SG securities analyst Charles Landa.

Commerzbank analyst Roman Cizdyn kept a buy rating on the stock.

Friends Provident - founded in 1832 to provide life assurance for quakers and ranking as the fifth biggest life assurer in Britain’s blue chip FTSE 100 index - traded 8.1% higher at 136-1/4p by 1124, among the biggest gainers in the sector across Europe.

Friends said that investor confidence was fragile but said that sales had been boosted by allowing customers to buy products online. This move helped to cut costs, say analysts.

Insurers across the world have struggled this year as a market slump has hit consumer demand for savings products, many of which invest heavily in equities.

The bear market has also put pressure on the industry’s capital strength.

Friends Provident shares have outperformed the DJ Stoxx European insurance sector by about 15% since the start of 2002, based on Monday’s close.