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Friends Life reveals with-profits investment performance

Friends Life has revealed the performance of its three main with-profits funds, with two delivering pre-tax returns of more than 9 per cent during 2014.

Friends Life manages with-profits funds on behalf of around one million policyholders. The provider has been created through a series of acquisitions and, as a result, manages with-profits policies from a number of old life insurers.

The Friends Life FLAS With Profits Fund, which contains ex-Sun Life Assurance Policies, returned 9.3 per cent before tax during the year. The firm says final bonus rates for unitised pensions and bonds have “generally been increased” in the fund, while conventional final bonus rates and “some” unitised life final bonus rates have been cut.

The Friends Life FLC With Profits Fund, containing ex-Axa Sun Life policies, also delivered returns of 9.3 per cent, with regular bonus rates on unitised and conventional policies increased or maintained for most customers. The provider says final bonus rates for unitised business have “generally” been increased, whereas conventional business has seen “some decreases”.

Investment returns on the Friends Life FP With Profits Funds, which contains ex-Friends Provident policies, are divided into two: pre and post-demutualisation. The pre-demutualisation fund delivered returns of 7.2 per cent, while the post-demutualisation fund posted 7 per cent.

Regular bonus rates have been increased or maintained across the fund. Final bonus rates for conventional policies have “generally” been increased, while some final bonuses on unitised policies have increased and some have decreased.

Market value reductions are not applied on any of the policies.

The provider was unable to provide a breakdown of the number of policies where bonuses had increased, decreased or been held at the time of writing.

Friends Life with-profits actuary Mike Kipling says: “During 2014, fixed interest stocks, both the UK gilt market and corporate bonds performed well.

“World stock markets also generally produced strong returns, although UK equity markets did less well. Against this backdrop, we are pleased to report that all of our with-profits funds have earned reasonable investment returns for our with-profits customers.”

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