31st Jan 2006 07:05
Friends Provident PLC31 January 2006 31 January 2006 Buoyant final quarter drives strong UK and International growth for FriendsProvident Total life and pensions new business (on a PVNBP1 basis) for 2005 increased by70% to £5,397 million (2004: £3,178m). UK life and pensions: • Total UK new business up 21% to £3,192 million (2004: £2,641m)• Group pensions up 48% to £1,577 million (2004 £1,065m)2• Investment up 15% to £672 million (2004: £582m)• Protection down 8% to £400 million (2004: £437m)• Individual pensions (excluding DWP rebate premiums) up 36% to £193 million (2004: £142m) International life and pensions: • Total International new business up 311% to £2,205 million (2004: £537m) following the acquisition of Lombard International (Lombard) in January 2005• Friends Provident International (FPI) business up 32% to £708 million (2004: £537m)• Lombard business up 15% (on a pro forma basis3) to £1,497 million (2004: £1,300m) Ben Gunn, chief executive of Friends Provident Life and Pensions, said: "These excellent results reflect the new shape of Friends Provident, withinternational sales growing strongly and exceeding 40% of the total, even thoughour UK sales will have outstripped the market. "In the UK, excellent service and a comprehensive choice of funds allowed us towin a greater share of the group pensions market, alongside strong increases inindividual pensions and investment sales. The subdued housing market throughmost of 2005 and increasing competition have continued to constrain protectionsales. "The highly successful group pensions sales in the last quarter moved the mixtowards inherently lower margin products in the UK last year. In 2006, we expectto maintain our strong volume momentum and, along side some pick up inprotection sales, anticipate stable margins within product segments. "FPI and Lombard made very strong progress. FPI has seen strong growth in allits main markets and Lombard enjoyed solid growth in all its key territorieswith the exception of Germany, which, as previously stated, benefited fromone-off exceptional sales in 2004. It is likely that the maximum amount underthe Lombard acquisition earn-out will be payable for 2005. "Both core businesses, UK and International, are very well positioned for nextyear and our distribution arrangements, in the UK and overseas, will have apositive impact to support future profitable growth." Notes to editors: 1. Except where noted otherwise, all new business figures in this announcement are on a Present Value of New Business Premiums (PVNBP) basis, in line with our statement at Q3 2005. PVNBP equals new single premiums plus the expected present value of new regular premiums. This change has been made due to the introduction of European Embedded Value (EEV) reporting. Previous announcements have given results on the Annual Premium Equivalent (APE) basis, and for convenience APE figures and further details on the PVNBP basis are shown in the tables at the end of this announcement.2. In our Q3 2005 announcement we stated that there would be a change to the definition of new group pensions business from Q4 2005 onwards. We no longer anticipate new entrants partially replacing leavers and treat them instead as new entrants when they arrive. All results and comparatives in this announcement include the impact of this change.3. The pro forma basis takes account of Lombard's 2004 new business, achieved before Friends Provident acquired the company in January 2005.4. Financial reporting dates 2005 Friends Provident plc preliminary results 23 March 2006 2006 Quarter 1 life and pensions new business 28 April 2006 2006 Friends Provident plc AGM 25 May 2006 - Ends - For further information, please contact: Nick Boakes Friends Provident plc 0845 641 7814Di Skidmore Friends Provident plc 0845 651 7833Chris Ford Friends Provident plc 0845 651 7832Sandra Grandison Friends Provident plc 0845 641 7834Simon Moyse Finsbury Limited 020 7251 3801 Ref: G011 Commentary and tables Total new life and pensions business in 2005 increased 70% to £5,397 million(2004: £3,178m) and by 147% to £2,071 million for the fourth quarter of 2005(2004: £839m), mainly reflecting the concentration of Lombard sales in thefourth quarter. UK life and pensions New UK life and pensions business in 2005 increased by 21% to £3,192 million(2004: £2,641m), and by 33% to £918 million for the fourth quarter of 2005(2004: £691m). Life business New life business for 2005 increased by 5% to £1,072 million (2004: £1,019m).Total fourth quarter sales were up 10% at £293 million (2004: £267m). New protection business continued the trend established in the first nine monthsof the year, declining by 8% for the whole year, to £400 million (2004: £ 437m),and by 5% for the fourth quarter, to £103 million (2004: £108m). Levels ofactivity in the housing market through most of the year were below those seen in2004 and there was increasingly strong pricing competition between protectionproviders in 2005. Investment business increased by 15% to £672m in the whole of 2005 (2004: £582m)and by 19% to £190 million in the fourth quarter (2004: £159m). Over 80% ofsales were of our Investment Portfolio Bond, allowing a wide choice of funds,including 52 external funds. Pensions business 2005 total new pensions business was 31% up on last year at £2,120 million(2004: £1,622m) with a very strong fourth quarter increase of 47% to £625million (2004: £424m). New group pensions business was 48% up over the year at £1,577 million (2004:£1,065), and the fourth quarter sales of £462 million (2004: £273m) were 69% upon last year. Our excellent reputation for service with intermediaries andflexibility in fund offerings were key factors in winning a number of largeschemes in the fourth quarter. New individual pensions business (excluding DWP rebates) was up by 36% for thefull year at £193 million (2004: £142m) and by 51% for the fourth quarter at £53million (2004: £35m). Our new product range, launched in April, has yielded anincrease of over 50% compared to 2004 in more profitable single premiumbusiness. DWP rebate business was 20% down at £108 million (2004: £135m), withthe fourth quarter 7% up on 2004 at £64 million (2004: £60m). Following a delayin the receipt of premiums earlier in the year, the majority of the DWP paymentsoutstanding at Q3 2005 have now been received. New annuity business was down 14%to £242 million (2004: £280m) in line with our selective approach to thismarket. UK outlook In 2005 we continued to establish a strong position with mortgage-relateddistributors, including a considerable number of distribution deals with newpartners, as a result of our market leading on-line processing capability. Thisshould flow through into our figures as we progress through 2006. We expectdemand for both individual and group pensions to continue to be stimulated bythe many and well documented regulatory and market factors. Our flexibleprocessing platform and independently assessed 5 Star customer service recordshould ensure we are competitive in the group pensions market. Overall, weexpect to maintain our volume momentum in the UK market, and, alongside anincrease in protection sales, stable margins within product segments. International life and pensions New International life and pensions business increased 311% (20% on a pro-formabasis) for 2005 to £2,205 million (2004: £1,837m) and by 23% on a pro-formabasis for the fourth quarter of 2005 to £1,153 million (2004: £936m). Friends Provident International (FPI) New FPI business increased over the full year by 32% to £708 million (2004:£537m) and by 52% to £225 million for the fourth quarter (2004: £148m). Singlepremium bond sales, mainly in the lower margin UK market, were the strongestdrivers of growth. Regular premiums rose by around 25% against 2004, bolsteredby a new product aimed at high net worth customers and by marketing campaigns inAsia and the Middle East. We expect to see continued growth across all our keymarkets as we increase our emphasis on Asia and seek more distributionagreements with strategic partners. Lombard International (Lombard) Lombard achieved £1,497 million of new business in 2005, an increase on apro-forma basis of 15% (2004: £1,300m). Sales continue to be heavily weighted tothe fourth quarter, with strong growth in new business, up on a pro-forma basisthat quarter by 18% at £928 million (2004: £788m). There were strong gainsacross a number of markets, particularly Belgium and the UK. The German marketremains important, despite no longer benefiting from the exceptional fourthquarter performance experienced in 2004. Sales were more geographically diversethan in 2004, with new business in Belgium, Germany and Spain approximatelyequal. This geographical diversity will provide a strong platform for furthergrowth in 2006 and beyond. About Friends Provident • One of the UK's leading financial services groups o A FTSE 100 company comprising three core businesses: • Friends Provident Life and Pensions Limited, a top ten UK life and pensions company and a leading international cross-border player • F&C Asset Management plc (51% ownership), a top five UK asset manager with a growing European presence • Emphasis on service o Five Star service awards for Life and Pensions and for Investments. Winner of Life and Pensions - Electronic award. (source: 2005 Financial Adviser Practiv Service Awards) o Best E-Commerce Provider (source: 2005 LifeSearch Protection Awards) o F&C voted 'Best Investment Trust Provider' in the 2005 Personal Finance Magazine Readership Awards • Leading-edge systems o Single-platform system capable of accommodating high volumes, cost effectively o Automated interface with back-office IFA and third party systems with over 50% of business transacted online o Winner of Life Insurance Company of the Year at the Professional Pensions UK Pensions Awards 2005 o Friends Provident is the only company to receive triple 'e' e-Excellence ratings for individual protection, individual personal pensions and group pensions awarded by the Financial Technology Research Centre in association with Money Marketing 2005 • Fast-growing o Market share (UK life and pensions) increased by a quarter since listing in 2001 o Funds managed by Friends Provident plc since it listed in 2001, have grown four-fold from c£30 billion to more than £130 billion • Financially strong o Financial strength credit ratings categorised 'strong' (Standard & Poor's A+ with stable outlook, Moody's A2 with positive outlook) o Risk Capital Margin covered over seven times (30 June 2005) o Free Asset Ratio 14.3% (30 June 2005) • A diversified provider of investment solutions o F&C is a market leader in the investment trust market. The flagship Foreign & Colonial Investment Trust was the first such trust, launched in 1868, and remains the largest of its kind o F&C's private equity partner, ISIS Equity Partners, was winner of the 2004 BVCA/ Real Deals Private Equity House of the Year Award o F&C is a top five manager of UK commercial property o F&C Amethyst was winner of its category in the 2005 EuroHedge Awards • Renowned ethical heritage o Founded by Quakers in 1832 to address social needs o Pioneered linking investments with ethical principles (Stewardship - 1984; Responsible Engagement Overlay - reo(R) - 2000) o Rated as one of the Top 100 Companies that Count and a member of the FTSE4Good and Dow Jones World Sustainability Indices o Stewardship Income Fund winner of the 2005 Lipper Funds Awards, ethical category o F&C (ISIS) overall winner of the Corporation of London's Liveable Cities Awards, 2004 and 2003. 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 12 months to 31 December 2005 vs 12 months to 31 December 2004 12 months 2005 12 months 2004 % Change Regular Single PVNBP Regular Single PVNBP Regular Single PVNBP Prems Prems Prems Prems Prems PremsUK Operations £m £m £m £m £m £m % % %-------------- ------- -------- ------- ------- ------- ------ ------- ------ ------LifeProtection 65.8 0.1 400 73.9 0.0 437 (11) 0 (8)Investment 1.8 660.3 672 1.6 574.7 582 13 15 15-------------- ------- -------- ------- ------- ------- ------ ------- ------ ------ 67.6 660.4 1,072 75.5 574.7 1,019 (10) 15 5-------------- ------- -------- ------- ------- ------- ------ ------- ------ ------PensionsIndividual Pensions 11.6 141.7 193 12.0 93.1 142 (3) 52 36DWP Rebates 0.0 107.7 108 0.0 135.3 135 0 (20) (20)Group Pensions 235.0 474.9 1,577 165.9 267.5 1,065 42 78 48Annuities 0.0 241.5 242 0.0 278.0 280 0 (13) (14)-------------- ------- -------- ------- ------- ------- ------ ------- ------ ------ 246.6 965.8 2,120 177.9 773.9 1,622 39 25 31-------------- ------- -------- ------- ------- ------- ------ ------- ------ -------------------- ------- -------- ------- ------- ------- ------ ------- ------ ------UK Life andPensions 314.2 1,626.2 3,192 253.4 1,348.6 2,641 24 21 21-------------- ------- -------- ------- ------- ------- ------ ------- ------ ------ InternationalOperationsLombard 0.0 1,497.3 1,497 0.0 0.0 0 - - -Friends Provident International 61.4 386.5 708 49.1 252.4 537 25 53 32-------------- ------- -------- ------- ------- ------- ------ ------- ------ ------Total InternationalLife and Pensions 61.4 1,883.8 2,205 49.1 252.4 537 25 646 311-------------- ------- -------- ------- ------- ------- ------ ------- ------ ------ -------------- ------- -------- ------- ------- ------- ------ ------- ------ ------Total GroupLife and Pensions 375.6 3,510.0 5,397 302.5 1,601.0 3,178 24 119 70-------------- ------- -------- ------- ------- ------- ------ ------- ------ ------ PVNBP by channel 12 months to 31 December 2005 vs 12 months to 31 December 2004 12 months 2005 12 months 2004 (excluding Lombard) £m % £m %------------ ----------- ----------- ----------- -----------UK - IFA 2,885 53.4 2,112 66.5UK - Tied 307 5.7 529 16.6International 2,205 40.9 537 16.9------------ ----------- ----------- ----------- ----------- Lombard Total PVNBP 2005 2004 •m £m •m £m------------ ----------- ----------- ----------- -----------12 Months 2,185 1,497 1,892 1,300 All amounts in currency other than sterling are translated into sterling at amonthly average exchange rate. Movements in exchange rates during 2005 have nothad any material impact on the new business reported for Lombard.Friends Provident New Life and Pensions Business 3 months to 31 December 2005 vs 3 months to 31 December 2004 Q4 2005 Q4 2004 % 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 0.0 103 18.1 0.0 108 (12) 0 (5)Investment 0.3 187.7 190 0.3 158.4 159 0 19 19-------------- ------- ------- ------- ------- ------ ------ ------- ------ ------ 16.3 187.7 293 18.4 158.4 267 (11) 19 10-------------- ------- ------- ------- ------- ------ ------ ------- ------ ------PensionsIndividual Pensions 2.6 43.4 53 2.6 24.3 35 0 79 51DWP Rebates 0.0 64.1 64 0.0 60.1 60 0 7 7Group Pensions 70.6 169.8 462 43.7 60.8 273 62 179 69Annuities 0.0 46.2 46 0.0 55.6 56 0 (17) (18)-------------- ------- ------- ------- ------- ------ ------ ------- ------ ------ 73.2 323.5 625 46.3 200.8 424 58 61 47-------------- ------- ------- ------- ------- ------ ------ ------- ------ -------------------- ------- ------- ------- ------- ------ ------ ------- ------ ------UK Life andPensions 89.5 511.2 918 64.7 359.2 691 38 42 33-------------- ------- ------- ------- ------- ------ ------ ------- ------ ------ InternationalOperationsLombard 0.0 927.9 928 0.0 0.0 0 - - -Friends ProvidentInternational 20.6 117.2 225 13.2 73.9 148 56 59 52-------------- ------- ------- ------- ------- ------ ------ ------- ------ ------Total InternationalLife and Pensions 20.6 1,045.1 1,153 13.2 73.9 148 56 1,314 679-------------- ------- ------- ------- ------- ------ ------ ------- ------ ------ -------------- ------- ------- ------- ------- ------ ------ ------- ------ ------Total GroupLife and Pensions 110.1 1,556.3 2,071 77.9 433.1 839 42 259 147-------------- ------- ------- ------- ------- ------ ------ ------- ------ ------ PVNBP by channel 3 months to 31 December 2005 vs 3 months to 31 December 2004 Q4 2005 Q4 2004 (excluding Lombard) £m % £m %----------- ----------- ----------- ----------- -----------UK - IFA 829 40.0 557 66.4UK - Tied 89 4.3 134 16.0International 1,153 55.7 148 17.6----------- ----------- ----------- ----------- ----------- Lombard Total PVNBP 2005 2004 •m £m •m £m----------- ----------- ----------- ----------- ----------- Q4 1,357 928 1,149 788 All amounts in currency other than sterling are translated into sterling at amonthly average exchange rate. Present Value of New Business Premiums (PVNBP) basis PVNBP equals new single premiums plus the expected present value of new regularpremiums. Premium values are calculated on a consistent basis with the contribution toprofits from new business on an EEV basis, to be announced on 23 March. Start ofyear assumptions are used for the economic basis and end of year assumptions areused for the operating basis. A risk free rate is used to discount expectedpremiums in future years. Discount rates 2005 2004UK 4.6% 4.8%FPI 4.6% 4.8% Friends Provident New Life and Pensions Business 2005 quarterly sales on PVNBP basis 3 months ending 31 March 2005 30 June 30 September 31 December 2005 2005 2005UK Operations £m £m £m £m------------- ---------- ---------- ---------- ----------LifeProtection 104 103 90 103Investment 136 165 181 190------------- ---------- ---------- ---------- ---------- 240 268 271 293------------- ---------- ---------- ---------- ---------- PensionsIndividual Pensions 41 47 52 53DWP Rebates 6 1 37 64Group Pensions 348 418 349 462Annuities 63 78 55 46------------- ---------- ---------- ---------- ---------- 458 544 493 625------------- ---------- ---------- ---------- ----------------------- ---------- ---------- ---------- ----------UK Life andPensions 698 812 764 918------------- ---------- ---------- ---------- ---------- InternationalOperationsLombard 193 157 219 928Friends ProvidentInternational 162 162 159 225------------- ---------- ---------- ---------- ----------Total InternationalLife and Pensions 355 319 378 1,153------------- ---------- ---------- ---------- ---------- ------------- ---------- ---------- ---------- ----------Total GroupLife and Pensions 1,053 1,131 1,142 2,071------------- ---------- ---------- ---------- ---------- Under this methodology, the impact of operating basis changes over the entireyear will normally be reflected in the final quarter PVNBP figures.Friends Provident New Life and Pensions Business Period to 31 December 2005 vs Period to 31 December 2004 12 months 3 months APE 2005 APE 2004 % change APE 2005 APE 2004 % changeUK Operations £m £m % £m £m %-------------- ------- ------- ------- ------- ------- -------LifeProtection 65.8 73.9 (11) 16.0 18.1 (12)Investment 67.8 59.1 15 19.1 16.1 19-------------- ------- ------- ------- ------- ------- ------- 133.6 133.0 0 35.1 34.2 3-------------- ------- ------- ------- ------- ------- ------- PensionsIndividual Pensions 25.8 21.3 21 6.9 5.0 38DWP Rebates 10.8 13.5 (20) 6.4 6.0 7Group Pensions 282.5 192.7 47 88.0 49.8 77Annuities 24.1 27.8 (13) 4.6 5.6 (18)-------------- ------- ------- ------- ------- ------- ------- 343.2 255.3 34 105.9 66.4 59-------------- ------- ------- ------- ------- ------- --------------------- ------- ------- ------- ------- ------- -------UK Life and Pensions 476.8 388.3 23 141.0 100.6 40-------------- ------- ------- ------- ------- ------- ------- InternationalOperationsLombard 149.7 0 - 92.8 0 -Friends ProvidentInternational 100.1 74.3 35 32.3 20.6 57-------------- ------- ------- ------- ------- ------- -------TotalInternationalLife andPensions 249.8 74.3 236 125.1 20.6 507-------------- ------- ------- ------- ------- ------- ------- -------------- ------- ------- ------- ------- ------- -------Total GroupLife and Pensions 726.6 462.6 57 266.1 121.2 120-------------- ------- ------- ------- ------- ------- ------- The 2004 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 2004 APE by £29m and 2004Q4 APE by £11m against the results previously reported for these periods. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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