UK - Friends Provident is looking to sell its 52% stake in F&C Asset Management, after it concluded the firm does not fit into its revised strategy.

Findings of a strategic review, announced in November after a planned merger with Resolution failed, revealed the company would in future focus on its "core strengths" of life and pensions products in the UK and internationally.

As a result, Friends Provident said it will concentrate on the protection and group pension markets in the UK, and intends to further develop its overseas business through Friends Provident International (FPI).

It confirmed it will withdraw from the wealth management market, apart from through life and pensions, while development of its retail-driven wrap platform will cease, and its stake in F&C Asset Management will be sold, alongside Lombard, a Luxembourg-based wealth management business, and the UK-based Pantheon Financial.

The Board confirmed it "intends to explore opportunities for these businesses with a view to maximising value for shareholders" and said it will work with the respective management teams to "establish strategies for achieving this while minimising disruption to the businesses".

Friends Provident claimed the revised strategy will help it to improve cashflow and returns for shareholders as the Q4 results, published at the same time, revealed the underlying profit before tax for 2007 is estimated to be just £20m on a European Embedded Value (EEV) basis.

Group pension business at FP increased 14% to £2.6bn, however the strategic review highlighted the significant short-term losses the company suffers, as in 2006 new business was valued at £126m yet the income generated from the £5bn assets under management was just £21m, leaving a cash loss of £105m.

This led the Board to admit the figures, including cashback and internal rate of return (IRR), were "not acceptable and must be improved".

In contrast, figures from F&C, also released today, showed new inflows of £703m into its open-ended investment company (OEIC) range - an increase of 37.3% on 2006 - but institutional outflows were £6.11bn compared with institutional inflows of £3.255bn - albeit up from £2.94bn in 2006.

In addition, F&C said it expects performance in 2008 to be "more of the same", following the restructuring of its emerging equities desk and continued strong performance on its Pacific growth fund.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Topics