Daily Insurance Industry News
Daily Insurance Industry News
Monday 21st of January 2019
December 31, 2007

Friends Provident review may recommend sale

by Gill Montia

Story link: Friends Provident review may recommend sale

Friends Provident, which earlier this year failed in its plans to merge with Resolution, is undertaking a strategic review that could lead to a sale of all or part of the company.

Sir Adrian Montague, the executive chairman of the life insurer, is reported to be opposed to an outright sale of the business but some analysts are expressing the view that Friends Provident does not have an independent future.

As the UK’s fourth-largest life insurer the company has a market value of around £3.7 billion.

It needs to raise around £600 million to support new business growth and this could prove difficult in the current financial climate.

The review could result in major changes to Friends’ core UK life business, including a reduction in the commissions paid to brokers and the withdrawal of certain capital-intensive products.

The company does also have the option of selling Lombard, its international division that specialises in services for high net worth individuals. The business is estimated to be worth £700 million.

There is also the possibility of Friends selling its 53% interest F&C Asset Management, the global asset manager for institutional and retail investors.

Such a move could raise around £510 million but would be a drastic measure because control of the independently-listed fund manager differentiates Friends Provident from its competitors.

Zurich Financial Services, Old Mutual and AXA are three possible bidders for the business.


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