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Advisers point to future Friends Life IPO

Friends Life 480

Advisers say Resolution founder Clive Cowdery could revive plans to list Friends Life on the stock exchange if market conditions improve.

In August 2011, the life sector consolidation vehicle set out proposals to split Friends Life into two separately listed businesses. In March, it announced the two businesses would be completely separated by early 2014 to ensure they could be sold off separately via initial public offerings.

The OpenCo, or open book business, includes the UK “go to market” business units, overseas business and Sesame Bankhall Group. The HeritageCo consists of the provider’s closed book business and associated parts such as Friends Life Investments, Friends Life’s listed debt and the UK pension fund.

Last week, Resolution announced it is abandoning the planned stockmarket listing. It has also ruled out any future mergers and acquisitions.

The decision means Friends Life will now operate like a traditional insurance company, with the firm merging the governance structures of Resolution and Friends Life to create a single board. This process is expected to take around six months.

Resolution founder Clive Cowdery will join the board, which will be chaired by Resolution chairman Mike Biggs. Friends Life chairman Sir Malcolm Williamson will become deputy chairman.

Resolution chief executive John Tiner will leave the company once the changes have been finalised.

Friends Life has also appointed Phoenix Group chief executive Jonathan Moss as chief executive of its heritage division. Moss replaces Evelyn Bourke, who resigned in June after less than a year in the role to join Bupa as chief financial officer.

Moss will join Friends early next month and will report to group chief executive Andy Briggs.

Speaking to Money Marketing, Briggs says: “The significant change is that we are no longer seeking further acquisitions and we no longer have a specific exit event.

“A lot of intermediaries have expressed some concern about what might happen in the future because of the uncertainty around the future of the businesses. That has gone now because we are clear that we will get on with organically growing Friends Life as a single business.

“We have no plan to list the open and closed businesses at all, either now or in the future.”

Hargreaves Lansdown pension investment manager Laith Khalaf says: “I think Clive Cowdery will still look to sell up in time. Running a life company on an ongoing basis was not what Resolution shareholders bought into.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “Clive Cowdery is one of the most intelligent people in the business. Clive can see a trend coming when others have not. I think a lot of other providers will watch what Friends does in the market carefully. I would not be surprised if they revisit these plans in the future.”

Briggs says Friends Life remains interested in competing more aggressively in the annuity market next year.

Briggs says: “We are still considering entering the open market option annuity market in the near future.

“The annuity market is in two halves – half of the market is existing customers staying with their provider and the other half is brokered on the open market by IFAs.

“We only play in the first bit at the moment and we are thinking about playing in the second bit. It is unlikely we would launch this year but we will be considering launching something in 2013.”

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