27th Apr 2007 07:05
Friends Provident PLC27 April 2007 27 April 2007 Friends Provident reports first quarter new business Total life and pensions new business (on a PVNBP1 basis) for the first quarterincreased by 12% to £1,497 million (2006: £1,331m). UK life and pensions highlights: • Total UK new business up 22% to £1,042 million (2006: £856m)• Group pensions up 30% to £598 million (2006: £460m)• Protection up 8% to £100 million (2006: £93m)• Investment down 24% to £138 million (2006: £181m)• Individual pensions (excluding DWP rebate premiums) up 114% to £122 million (2006: £57m)• Annuities up 44% to £75 million (2006: £52m) International life and pensions highlights: • Total international new business down 4% to £455 million (2006: £475m)• Friends Provident International (FPI) down 2% to £237 million (2006: £241m)• Lombard down 7% to £218 million (2006: £234m) Ben Gunn, chief executive of Friends Provident Life and Pensions, said: "In the UK our excellent momentum in pensions sales continues, with grouppensions up by 30% and individual pensions more than doubled. The protection market remains key to our plans. We expect this market to remain flat this year, although we will seek to take market share. In addition, it is expected that investment business will see improved performance in the second half of the year. "As stated at the time of our Preliminary results, product mix and the level ofprotection sales remain critical to achieving our UK new business profits targetof £180-200 million in 2008. The protection market remains challenging and the impact of this will become clearer as the year progresses. "Both FPI and Lombard were slightly down on the first quarter of 2006 but both results were very encouraging in the light of the strong comparative. The underlying growth trends in these businesses remain good. " - Ends - For further information, please contact: Nick Boakes Friends Provident plc 0845 641 7814Chris Ford Friends Provident plc 0845 641 7832Di Skidmore Friends Provident plc 0845 641 7833Sandra Grandison Friends Provident plc 0845 641 7834Vanessa Neill Finsbury Limited 020 7251 3801 Ref: H096 Notes to Editors: 1.New business is reported on the Present Value of New Business Premiums (PVNBP)basis, which represents new single premiums plus the expected present value of new business regular premiums. A table detailing sales on an Annualised Premium Equivalent (APE) basis (annualised new regular premiums plus 10% of single premiums) is at the back of this announcement. 2. Financial reporting dates F&C Asset Management plc quarter 1 Funds Under Management 27 April 2007Friends Provident plc Annual General Meeting 24 May 2007F&C Asset Management plc interim results 6 August 2007Friends Provident plc interim results 8 August 2007F&C Asset Management plc quarter 3 funds under management 30 October 2007Friends Provident quarter 3 Life & Pensions new business 30 October 2007 3. Certain statements contained in this announcement constitute 'forward-lookingstatements'. Such forward-looking statements involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements, from time to time, of Friends Provident plc, its subsidiaries and subsidiary undertakings or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include, among others, adversechanges to laws or regulations; risks in respect of taxation; unforeseenliabilities from product reviews; asset shortfalls against product liabilities;changes in the general economic environment; levels and trends in mortality,morbidity and persistency; restrictions on access to product distributionchannels; increased competition; and the ability to attract and retainpersonnel. These forward-looking statements are made only as at the date of thisannouncement and, save where required in order to comply with the Listing Rules,there is no obligation on Friends Provident plc to update such forward-lookingstatements. About Friends Provident Friends Provident plc is the holding company of the Friends Provident Group ofcompanies and a member of the FTSE 100. With more than 2.5 million customers theGroup employs approximately 5,000 staff in its three core businesses: UK Life &Pensions, International Life & Pensions and Asset Management. Now in its 175th anniversary year, the business was founded on Quaker principlesand aimed to alleviate the hardship of families facing misfortune. FriendsProvident has embraced corporate governance and achieving high standards ofcorporate behaviour and accountability to both stakeholders and customers is atthe heart of our business. In 2001 the company established the grant-makingcharity The Friends Provident Foundation with the aim to encourage new ways ofthinking about how money can be used to solve a wide range of problems. For more information on Friends Provident including, photos, awards, fast facts,presentations, and media contacts please visit the media section atwww.friendsprovident.com/ media Commentary and tables UK life and pensions New UK life and pensions business increased by 22% to £1,042 million (2006: £856m). Life business New protection business increased by 8% to £100 million (2006: £93m). Sales inthe first quarter of 2006 were lower than subsequent quarters and comparativeswill become tougher as the year progresses. This market remains extremelycompetitive and the mortgage-related protection market, which accounts for themajority of sales, has been broadly flat in the year so far. We have managedpricing to selectively target market segments where we have historically beenless competitive. New investment business, where we have a lower share of the market, was down by24% to £138 million (2006: £181m). Competitor activity remained strong with anumber of promotions from large providers running throughout the quarter.Structured products continue to take share in this market. We launched ourGuaranteed Bond during the quarter although it has taken time to becomeestablished on major distributor product panels. Pensions business Group pensions sales were up 30% at £598 million (2006: £460m). Around half ofnew regular premium business was generated from our existing book. For newschemes, this continues to be an active market in both employee benefitconsultant and specialist IFA sectors, where we enjoy competitive advantage fromour reputation for service and ability to customise our proposition to meet theneeds of the largest schemes. We continued to make incremental developments toimprove fund choice and ease of use. New individual pensions business (excluding DWP rebate premiums) was up 114% to£122 million (2006: £57m). This continued the upward quarterly trend with sales15% up on the preceding quarter. Our proposition focuses on single premiumbusiness. DWP rebate premiums were 31% lower at £9million (2006:£13m) where thefirst quarter of 2006 benefited from some premiums held over from 2005. New annuity business was up by 44% at £75 million (2006: £52m) and it was 10% upon the fourth quarter of 2006. This business comprises almost entirely vestingpolicies from our pension book. The year-on-year increase reflects subdued salesin the first quarter of 2006 because of deferred vestings leading up to pensionsA-Day. UK outlook We expect the protection market to remain flat overall in 2007. We will continueto target specific sections of the market where we are underweight to buildshare. These actions shouldfeed in gradually through the second half of theyear. In investment business, we expect the Guaranteed Bond to add to sales from thesecond quarter. We will run promotions for existing bond products through themiddle of the year, although the impact of such activity is hard to predict. Newproducts, as well as our wrap platform, are planned for launch late in the year. The group pensions market will continue to be active, driven by ongoing trendsof trust-based schemes to contract-based schemes, defined benefit to definedcontribution provision, and employers restructuring their schemes. Sales thisquarter were down on the fourth quarter of 2006 reflecting the seasonal patternof stronger second and fourth quarters. We will launch a SIPP option on groupschemes in the second half of the year as part of ongoing activity to maintainthe attractiveness of our proposition. Growth from quarter-to-quarter in individual pensions is expected to moderate asthe impact of last year's Pensions 'A Day' regulation reduces. In early April weundertook a transaction with Swiss Re to transfer longevity and investment riskthrough reinsurance of a significant proportion of our annuity back book, inline with our continued management of risk and reward across the business. Ourstrategy in the post-retirement market is unaffected and annuity sales areexpected to rise gently in proportion to vesting pensions. International life and pensions New international life and pensions business fell by 4% to £455 million (2006: £475m). Friends Provident International (FPI) First quarter new business was close to the very strong 2006 comparative, whichwas itself up 49% on the first quarter of 2005. Sales were down just 2% at £237million (2006: £241m) and up 26% on the fourth quarter of 2006. There were anumber of large single premium bonds, particularly in the UK reflecting demanddriven by the end of the tax year. Sales in Asia were ahead of the fourthquarter of 2006 with more activity in the Hong Kong market, although not so muchas in the first half of 2006. Our new German pensions product made goodprogress. Lombard International (Lombard) New business volumes were slightly lower year-on-year, 7% down at £218 million(2006: £234m). This result reflects the timing of large cases, which contributedmore in first quarter 2006. Adverse tax changes announced in 2006 have alsoslightly affected results compared to firstquarter 2006, in a small number ofmarkets. Lombard's seasonal pattern of an extremely strong fourth quarter is set tocontinue, as is the variability of quarterly results due mainly to the timing oflarge cases. The outlook is positive with plenty of activity across the majorityof markets. Friends Provident New Life and Pensions Business 3 months to 31 March 2007 vs 3 months to 31 March 2006 Q1 2007 Q1 2006 % Change Regular Single PVNBP Regular Single PVNBP Regular Single PVNBP Prems Prems Prems Prems Prems PremsUK Operations £m £m £m £m £m £m % % %LifeProtection 16.9 0.0 100 16.0 0.0 93 6 - 8Investment 0.6 134.3 138 0.4 178.3 181 50 (25) (24) 17.5 134.3 238 16.4 178.3 274 7 (25) (13) PensionsIndividual 5.0 100.7 122 2.1 47.0 57 138 114 114PensionsDWP Rebates 0.0 9.3 9 0.0 12.6 13 - (26) (31)Group Pensions 95.9 184.9 598 67.8 136.4 460 41 36 30Annuities 0.0 74.8 75 0.0 52.3 52 - 43 44 100.9 369.7 804 69.9 248.3 582 44 49 38 UK Life and 118.4 504.0 1,042 86.3 426.6 856 37 18 22Pensions International OperationsLombard 0.0 218.2 218 0.0 234.3 234 - (7) (7)Friends Provident 18.6 141.8 237 18.5 150.2 241 1 (6) (2)InternationalTotalInternational 18.6 360.0 455 18.5 384.5 475 1 (6) (4)Life and Pensions Total Group Life 137.0 864.0 1,497 104.8 811.1 1,331 31 7 12 and Pensions Effect of currency movements All amounts in currency other than sterling are translated into sterling at a monthly average exchange rate. The estimated new business assuming constant currency rates would be as follows: Q1 2007 Q1 2006 Change (as reported) £m £m %Lombard 222 234 (5)Friends Provident 248 241 3InternationalTotal International 470 475 (1)Life and Pensions PVNBP by operations 3 months to 31 March 2007 vs 3 months to 31 March 2006 Q1 2007 Q1 2006 £m % £m % UK 1,042 70 856 64Lombard 218 14 234 18Friends Provident 237 16 241 18InternationalInternational 455 30 475 36 PVNBP equals new single premiums plus the expected present value of new regular premiums. 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 reflectedin the 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. In classifying new business premiums the following basis of recognition is adopted: • Single new business premiums consist of those contracts under which there is no expectation of continuing premiums being paid at regular intervals; • Regular new business premiums consist of those contracts under which there is an expectation of continuing premiums being paid at regular intervals, including repeated or recurrent single premiums where the level of premiums is defined, or where a regular pattern in the receipt of premiums has been established; • Non-contractual increments under existing group pensions schemes are classified as new business premiums; • Transfers between products where open market options are available are included as new business; and • Regular new business premiums are included on an annualised basis. Analysis of APE 3 months to 31 March 2007 vs 3 months to 31 March 2006 Q1 APE APE % 2007 2006 changeUK Operations £m £m % LifeProtection 16.9 16.0 6Investment 14.0 18.2 (23) 30.9 34.2 (10) Pensions Individual Pensions 15.0 6.8 121DWP Rebates 0.9 1.3 (31)Group Pensions 114.4 81.4 41Annuities 7.5 5.2 44 137.8 94.7 46 UK Life and Pensions 168.7 128.9 31 International OperationsLombard 21.8 23.4 (7)Friends Provident International 32.7 33.5 (2)Total International Life and Pensions 54.5 56.9 (4) Total Group Life and Pensions 223.2 185.9 20 Annualised Premium Equivalent (APE) represents annualised new regular premiums plus 10% of single premiums. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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