Friends Provident posts £541 million loss

by Gill Montia

Story link: Friends Provident posts £541 million loss

Friends Provident has announced a net loss of £541 million for 2008, compared with a loss of £108 million a year ago.

The life and pensions provider also reported that losses on investments stood at £6.6 billion last year, up from £2.6 billion in 2007.

In presenting the results, chief executive Trevor Matthews called 2008 “an historic year, a one-in-a-100-year event” and referred to the declines in equity markets and falling asset values as a “perfect storm”.

However, Mr Matthews reassured that the company is maintaining its capital strength and “prudent approach to accounting”, allowing the group to pay a dividend of 3.9p, down from 8p a year ago.

Along with other UK life assurers, Friends has been forced to cut bonus rates on its with-profits policies by up to 20%, its with-profits fund losing 10.5% of its value during 2008.

The group has also undergone a restructure since its failed attempt to acquire Resolution, in 2007.

An ongoing a cost reduction programme achieved savings of £25 million last year and is expected to yield annual savings of around £40 million by the end of 2009.

Last week, Friends announced that it had shelved plans to sell its 52% stake in F&C Management, the global asset manager that focuses on institutional and retail investors.

The controlling share has been up for sale for around a year but no buyer has emerged.