28th Apr 2006 07:05
Friends Provident PLC28 April 2006 28 April 2006 Friends Provident Q1 new business Strong growth maintained First quarter life and pensions new business (on a PVNBP1 basis) increased by26% to £1,331 million (2005: £1,053m) including record quarterly sales fromFriends Provident International (FPI). UK life and pensions:• Total UK new business up 23% to £856 million (2005: £698m)• Group pensions up 32% to £460 million (2005: £348m)• Investment up 33% to £181 million (2005: £136m)• Protection down 11% to £93 million (2005: £104m)• Individual pensions (excluding DWP rebate premiums) up 39% to £57 million (2005: £41m) International life and pensions:• Total International new business up 34% to £475 million (2005: £355m)• Friends Provident International (FPI) posted record quarterly results, up 49% to £241 million (2005: £162m)• Lombard business up 21% to £234 million (2005: £193m) Ben Gunn, chief executive of Friends Provident Life and Pensions, said:"Our results demonstrate the continued strong momentum across our life andpensions businesses, here in the UK but especially in our Internationaloperations. "Our International businesses both had a tremendous quarter. FPI enjoyedparticularly strong growth in Asia and the Middle East. Lombard continues tobenefit from the diversity of its established distribution partnerships. "The UK has seen a continuation of the trends established in 2005, set against achanging legislative environment. Preparations for Pensions A-Day went smoothlyand our industry-leading service levels have enabled us to capitalise onincreased activity in the pensions market. The Budget brought changes toinheritance tax rules but will have limited impact on Friends Provident. "Good figures for investment business reflect increasing consumer confidence ininvestment markets. The protection market remains challenging, but improvementsin our competitive position and new distribution partnerships mean we areconfident for the remainder of the year. "We have maintained strong growth momentum, and the prospects are bright for allour life and pensions operations." Notes to editors:1. Except where noted otherwise, all new business figures in thisannouncement are on a Present Value of New Business Premiums (PVNBP) basis.PVNBP equals new single premiums plus the expected present value of new regularpremiums. This replaces the Annual Premium Equivalent (APE) basis, used up to Q32005, and for convenience APE figures and further details on the PVNBP basis areshown in the tables at the end of this announcement. 2. Financial reporting dates2006 Friends Provident plc AGM 25 May 2006Friends Provident Workshop on International Business 7 June 2006Friends Provident plc Group Interim Results 8 August 2006and Life & Pensions Quarter 2 New Business AnnouncementFriends Provident Life & Pensions Quarter 3 New 31 October 2006Business Announcement 3. Certain statements contained in this announcement constitute 'forward-lookingstatements'. Such forward-looking statements involve risks, uncertainties andother factors, which may cause the actual results, performance or achievements,from time to time, of Friends Provident plc, its subsidiaries and subsidiaryundertakings or industry results to be materially different from any futureresults, performance or achievements expressed or implied by suchforward-looking statements. Such risks, uncertainties and other factors include,among others, adverse changes to laws or regulations; risks in respect oftaxation; unforeseen liabilities from product reviews; asset shortfalls againstproduct liabilities; changes in the general economic environment; levels andtrends in mortality and morbidity; restrictions on access to productdistribution channels; increased competition; and the ability to attract andretain personnel. These forward-looking statements are made only as at the dateof this announcement and, save where required in order to comply with theListing Rules, there is no obligation on Friends Provident plc to update suchforward-looking statements. - Ends - For further information, please contact: Nick Boakes Friends Provident plc 0845 641 7814Di Skidmore Friends Provident plc 0845 641 7833Chris Ford Friends Provident plc 0845 641 7832Sandra Grandison Friends Provident plc 0845 641 7834Simon Moyse Finsbury Limited 020 7251 3801 Ref: G065 Commentary and tables UK life and pensionsFirst quarter new UK life and pensions business increased by 23% to £856 million(2005: £698m). Life businessNew life business increased by 14% to £274 million (2005: £240m). New protection business including income protection, declined by 11% to £93million (2005: £104m). This was against the backdrop of a competitive market.However, we have recently taken advantage of improved reinsurance terms toreposition our product pricing without affecting margins. This, together with anumber of new distribution partnerships beginning to produce meaningful volumes,means the outlook for our market share is positive. Tax Relief Life Cover waslaunched on A-Day as a lower cost alternative to existing products, positioningus well if this market grows rapidly. Investment business increased by 33% to £181m (2005: £136m). Bond salesrepresent the majority of this business and the increase reflects growingconsumer confidence after strong investment market performance. We continue toenhance our fund and product ranges and expect our sales to reflect markettrends. We do not expect a significant impact following the proposed inheritancetax changes contained within the Finance Bill due to our relatively low volumesof new trust-related investment business. Pensions businessTotal new pensions business increased by 27% to £582 million (2005: £458m). Verystrong gains in group and individual pensions have been achieved. New group pensions business increased by 32% to £460 million (2005: £348m). Thishigh level of activity is expected to continue for some time. Our singleplatform has enabled the system changes required ahead of A-Day to be deliveredmore easily, which will help us to maintain our strong service proposition andfocus on gaining profitable market share. New individual pensions business increased by 39% to £57 million (2005: £41m).The comparative predates the relaunch of the new range in April 2005. We targetsingle premium business where returns are better than the higher volume but morecompetitive regular premium market. Annuities sales decreased by 17%. This result is consistent with our selectiveapproach to this market, where we price for margin rather than volume. UK outlookWe continue to sign distribution agreements to improve our position in the UKmarket, although the effect of these will only gradually be felt. The aim in theUK remains to build the overall profit contribution from new business and growahead of the market. International life and pensionsNew International life and pensions business increased 34% to £475 million(2005: £355m). Friends Provident International (FPI)New FPI business increased by 49% to £241 million (2005: £162m), a recordquarter up 7% on Q4 2005. Growth was driven by Asia and the Middle East,assisted by a number of large single premium bonds in Europe which tend to belower margin. Regular premium products launched late last year in Asia andSweden have also made a positive contribution to the result. There will be someimpact on sales in the specialist UK market from the proposed Finance Bill trustchanges, although this impact is expected to be modest. The outlook for theremainder of the year is good. Lombard International (Lombard)Lombard achieved £234 million of new business, an increase of 21% (2005: £193m).Southern Europe has had a particularly strong Q1, and the UK is up by 50% on2005 buoyed by strong investment markets. The only major market with volumesbelow 2005 is Germany, where Q1 2005 comparatives were especially high due tothe impact of tax changes at the end of 2004. The established pattern ofseasonal sales, with a dominant final quarter, is expected to recur and theoutlook remains positive. About Friends ProvidentFriends Provident, the FTSE 100 company, is a major financial services groupcomprising three core businesses: • A top ten UK Life & Pensions company• Leading international cross-border life businesses• One of the largest asset managers in Europe The business, founded in 1832 to alleviate the hardship of families facingmisfortune, is still underpinned by ethical principles. We have built anaward-winning reputation for using technology innovatively, enabling our peopleto deliver excellent levels of service that we believe are unrivalled in ourindustry, setting us apart from competitors. UK Life & Pensions• Has 2.5 million customers• Provides a comprehensive range of life protection, income protection, pensions and investment products for individual customers and corporate clients.• Distribution primarily through IFAs but with an increasing proportion from banks, building societies and other strategic partnerships International Life & PensionsOperating through 2 companies:• Friends Provident International (FPI), one of the top five offshore life companies operating in the cross-border market. Based in Isle of Man selling savings, bond and protection products into Asia, the Middle East, Continental Europe and the UK• Lombard, Luxembourg-based life assurance company founded in 1991 and acquired by Friends Provident in January 2005. It provides life assurance-based wealth planning solutions and is the largest pan-European life assurance company of its kind More 'at a glance' information available at www.friendsprovident.com/fastfactsFriends Provident media image library is available atwww.friendsprovident.com/imagelibrary a Newscast login is required. Friends Provident New Life and Pensions Business 3 months to 31 March 2006 vs 3 months to 31 March 2005 Q1 2006 Q1 2005 % Change Regular Single PVNBP Regular Single PVNBP Regular Single PVNBP Prems Prems Prems Prems Prems PremsUK Operations £m £m £m £m £m £m % % %LifeProtection 16 0 93 17 0 104 (6) 0 (11)Investment 0 178 181 0 134 136 0 33 33 16 178 274 17 134 240 (6) 33 14 Pensions Individual 2 47 57 3 28 41 (33) 68 39PensionsDWP Rebates 0 13 13 0 6 6 0 117 117Group Pensions 68 136 460 48 113 348 42 20 32Annuities 0 52 52 0 63 63 0 (17) (17) 70 248 582 51 210 458 37 18 27 UK Life and 86 426 856 68 344 698 26 24 23Pensions InternationalOperationsLombard 0 234 234 0 193 193 0 21 21Friends Provident 19 150 241 12 99 162 58 52 49InternationalTotal 19 384 475 12 292 355 58 32 34International Lifeand Pensions Total Group Life 105 810 1,331 80 636 1,053 31 27 26and Pensions PVNBP by channel 3 months to 31 March 2006 vs 3 months to 31 March 2005 Q1 2006 Q1 2005 £m % £m % UK - IFA 786 59 632 60UK - Tied 70 5 66 6International 475 36 355 34 PVNBP equals new single premiums plus the expected present value of new regularpremiums.Premium values are calculated on a consistent basis with the EEV contribution toprofits from new business. Start of period assumptions are used for the economicbasis and end of period assumptions are used for the operating basis. A riskfree rate is used to discount expected premiums in future years. The impact ofoperating assumption changes across a whole reporting period will normally bereflected in the PVNBP figures for the final quarter of the period that thebasis changes relate to. No change in operating assumptions will be reflected inthe PVNBP for the first and third quarters, when the contribution to profitsfrom new business is not published. All amounts in currency other than sterlingare translated into sterling at a monthly average exchange rate. Discount rates 2006 2005UK 4.1% 4.6%FPI 4.1% 4.6% Friends Provident New Life and Pensions Business 3 months to 31 March 2006 vs 3 months to 31 March 2005 Q1 APE APE % 2006 2005 change UK Operations £m £m %LifeProtection 16.0 17.0 (6)Investment 18.2 13.9 31 34.2 30.9 11 Pensions Individual 6.8 5.8 17PensionsDWP Rebates 1.3 0.6 117Group Pensions 81.4 59.0 38Annuities 5.2 6.3 (17) 94.7 71.7 32 UK Life and 128.9 102.6 26Pensions InternationalOperationsLombard 23.4 19.3 21Friends Provident 33.5 21.9 53InternationalTotal 56.9 41.2 38International Lifeand Pensions Total Group Life 185.8 143.8 29and Pensions The 2005 figures for group pensions business are restated to take into accountthe effect of a change in the definition of new business. We no longeranticipate new entrants partially replacing leavers and treat them instead asnew entrants when they arrive. This change increased Q1 2005 APE by £14m againstthe result reported in 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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