Friends Provident plc - Interim Management Statement including first quarter 2009 Life & Pensions new business

Friends Provident plc - Interim Management Statement including first quarter 2009 Life & Pensions new business

Maintaining our strong financial position

Corporate highlights

· Strong Insurance Groups Directive (IGD) surplus, estimated at £0.8 billion at 31 March 2009 (31 December 2008: £0.85bn)

· Further progress on cost savings, with £31 million run-rate of annualised savings at 31 March 2009 (31 Dec 2008: £25m)

· Agreement in principle to provide protection products in conjunction with Tesco Personal Finance, part of one of the world’s leading retailers

Trading highlights

· Total sales were down 40% reflecting the new strategy and tough economic environment
· UK individual protection sales strengthened in March with improvements in application counts through the quarter, but 8% lower than fourth quarter 2008 reflecting challenging housing market conditions

· UK corporate sales from new group pensions schemes resuming well, while overall sales of £72 million reflect impact of economic conditions on new business from existing schemes

· FPI sales 11% lower than fourth quarter at £37 million, continuing to develop presence in the Middle East while Hong Kong market is slow

· Lombard down 16% year-on-year as fewer large cases fall within first quarter result

Trevor Matthews, chief executive officer of Friends Provident plc, said:

“In the current economic environment, trading continues to be tough. I am delighted to announce that in line with our strategy, we have significantly broadened our distribution capabilities with an agreement in principle to provide protection products with Tesco Personal Finance, a very exciting development. We are very much back in business in group pensions, winning 20 schemes in the quarter, and our capabilities have been recognised by a number of awards.

“Our capital position is strong, despite further adverse movements in credit markets this year, and our reserves for corporate bond defaults are the most prudent among our peer group. We are focused on improving the cash characteristics of our business, with further good progress on our cost reduction programme. I am confident that the actions we are taking will stand Friends Provident in good stead for the future.”

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