Friends Provident sells non-core business

by Gill Montia

Story link: Friends Provident sells non-core business

Friends Provident, the life and pensions provider, is selling three of its wealth management assets, which have a combined value of around £1.2 billion.

Following the failure of its merger negotiations with Resolution, the closed life funds consolidator, Friends undertook a far reaching review that has already resulted in 600 jobs losses and could result in further sales.

News of the disposals was accompanied by a warning that while this year’s dividend will be maintained, next year’s will be halved, the company’s profits having fallen to £20 million in 2007, compared with £509 million in 2006.

Friends’ chairman, Sir Adrian Montague, said: “We are pursuing a very different strategy. It’s going to produce a very different group. It is self-supporting and self-funding. We are now living within our means.”

Last year, questions were raised about Friends’ ability to fund new business but plans for a £500 million bond issue were dropped in favour of a more radical strategy.

The company owns 52% of fund manager, F&C Asset Management, and it is rumoured that this will also be sold.

It is also debating the future of Lombard, its investment firm, and Pantheon, a firm of financial adviser acquired in 2007.

Some analysts have been disappointed by the outcome of the post-Resolution review, and still consider Friends vulnerable to a takeover.