Friends won’t sell units at cut-price

by David Masters

Story link: Friends won’t sell units at cut-price

Friends Provident, the smallest provider of blue-chip life insurance in the UK, will not sell its Luxembourg-based unit Lombard insurance or its stake in fund manager F&C unless the price is right.

CEO Trevor Matthews, appointed five weeks ago, said the company does not need the money from the sales to support its strategic outlook because cost cutting projections are effective enough.

Friends Provident has been rearranging its business since January this year to cut costs.

The company’s cost cutting strategy is on track to reduce costs £40 million per year by 2009. This will be done by reducing dividends and commissions on the least profitable policies.

However, he went on to say that the company’s plan to sell the units is still likely to go ahead as the sale of non-core assets will help the firm in its bid to cut costs.

Shares in Friends Provident have fallen almost 40% since January with investors doubting the firm’s ability to sell off non-core assets, and worried about falling insurance sales as Britain enters a recession.

Matthews plans to turn fortunes around by redirecting the company’s focus onto expatriate Britons in Asia and the Middle East.

Lombard, which offers life insurance to individuals with a high net-worth, has an estimated worth of £500 million, and Friend’s asset management business is worth around £266 million.