Friends Life has reported a 7 per cent drop in half-year pre-tax profits, from £171m to £159m, as the provider gears up its proposition following the Budget.
The company says the drop in profits reflects “adverse one-off items and lower in-force surplus following positive experience in 2013”.
Friends Life’s closed book Heritage division delivered a 13 per cent year-on-year increase in profits, from £116m to £131m, while profits in the open book UK business dropped from £26m to £10m, driven by “adverse impacts” in the retirement income business.
Total sales in the UK arm were up 25 per cent, from £324m to £405m, as volumes within the corporate benefits division surged from £253m in the first half of 2013 to £328m this year.
Retirement income sales were down marginally, from £32m to £30m, while protection new business rose 21 per cent, from £39m to £47m.
Friends Life group chief executive Andy Briggs says the company plans to boost its direct-to-consumer proposition following the Budget announcement.
He says: “We believe that the biggest area of growth going forward will be in the ‘flexible income’ space.
“Those customers that decide not to buy an annuity will want much simpler propositions, so that they can take a regular income from their accumulated pension and other assets.
“In particular, they will want to do this in the most tax efficient way, and hence a proposition offering both a pensions based vehicle alongside an Isa, and ensuring tax efficient switching between the two, will be key.”
Friends Life also plans to add “retail platform functionality” to its existing corporate wrap platform.