Friends signals sales turnaround

FRIENDS Provident, the life insurer, has signalled a recovery in business as the former mutual begins to reap the benefits of its flotation last year.

The group has struggled to compete in the rapidly-consolidating UK long-term savings market, where big firms have been winning market share from smaller, less financially-strong players. Friends' overall new business sales for 2001 slipped to £343.1m from £352m a year earlier.

But the financial muscle gained from flotation helped increase sales in the fourth quarter, particularly in pensions. Fourth-quarter sales rose to £97.2m, up 13% on the preceding three months. Second-half sales rose to £183.3m, up nearly 15% on the first half.

'The growth in the second half of 2001 demonstrates our increased strength and presence in the marketplace,' said chief executive Keith Satchell.

The stock, which debuted at 225p last summer, rose 5p in early trade to 204 1/4p.

Sales are expressed as annual premium equivalent, a standard industry measure, which takes all annual premiums, plus one tenth of single premiums to reduce volatility.

Friends has been lagging larger competitors such as CGNU and Prudential, the two biggest UK life and pensions groups, which both had strong sales increases last year, despite a stock market downturn which could have dampened demand for savings products.

Friends converted from a mutually-owned group to boost its financial strength, a key factor in winning customers after high-profile financial troubles at mutually-owned Equitable Life. Satchell said Friends' improved financial strength following the flotation had raised confidence and support from the independent financial brokers who sell Friends' products.