6th Aug 2014 07:54
LONDON (Alliance News) - Friends Life Group Ltd, formerly known as Resolution Ltd, Wednesday reported a 7.0% decline in first half pretax operating profit, which it put down to a number of one-off items and lower in-force surplus, while the company also was hurt by a fall in the value of its new business.
In a statement, the life and pensions group said it made a GBP159.0 million pretax operating profit in the six months ended June 30, compared with GBP171.0 million the corresponding period last year. Value of new business fell by 24% to GBP65.0 million, hit by increased competition in its retirement income business and challenging markets for its international division.
Friends Life had expected the fall in value of new business due to changes made as part of the UK government budget earlier this year, which removed the effective requirement for individuals to buy annuities - products providing guaranteed income in retirement - with their pension pots.
Sustainable free surplus increased to GBP163.0 million from GBP142.0 million.
One-off items included costs on last month's sale, still subject to regulatory and anti-trust approvals, of high-end wealth manager Lombard to the Blackstone Group. Friends Life said that it has received regulatory approval to increase the scale of the share buy-back related to the Lombard sale to GBP317.0 million from GBP261.0 million.
"The first half of 2014 has witnessed some of the most far reaching changes to the UK life sector for more than a generation. The regulatory changes announced in March present challenges and opportunities for all market participants, especially in the UK retirement savings market," Chief Executive Andy Briggs said in a statement.
"The industry has been presented with the opportunity to develop innovative solutions to serve the needs of its customers. Implementing reforms to deliver better solutions for customers will take time - and the final outcomes are not entirely clear at this stage," Briggs added.
Friends Life kept its interim dividend at 7.05 pence per share.
Shares were Wednesday quoted down 0.8% at 323.10 pence.
By Samuel Agini; [email protected]; @samuelagini
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