Uncertain future for Friends Provident

by Gill Montia

Story link: Uncertain future for Friends Provident

The chief executive of Friends Provident, Philip Moore, is expected to resign.

Mr Moore led the company in its negotiation for a merger with Resolution, the closed life fund consolidator.

His credibility was questioned at an early stage in the proceedings because he initially insisted that Resolution and Friends Provident were not compatible but later agreed to proceed with the merger.

Despite initial steady progress, the proposal became untenable as both Pearl Group and Standard Life began a bidding war for Resolution, which has ended with Pearl poised to takeover the company.

The insurance industry is currently undergoing a phase of consolidation and the failure of the merger plans has left Friend’s Provident with an uncertain future.

The move would have provided the life insurer with expansion opportunities and it now plans to increase debt by £500 million to fund new business.

However, Friends Provident will receive a £49 million break fee from Resolution.

Jim Smart, Friends Provident’s finance director, is expected to take over as interim chief executive until a replacement for Mr Moore is found.

Mr Smart has been with Friends Provident for just over a year, having previously been finance director for Boots. He left the company when it merged with Alliance UniChem in 2006.