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Friends’ pension sales hit by merger concerns

Friends Provident’s pension sales have fallen amid broker concerns over the merger of F&C and Isis.

Friends’ total new pension business fell by 7.2 per cent last year to 228m from 246m in 2003. Group pension new business fell by 7 per cent to 164m from 176m and new individual pension business fell by 10 per cent to 36m from 40m. Friends says the overall group pension market was sluggish, increasing by only 1.1 per cent.

New annuity business also fell by 5 per cent to 28m. Contractions in the with-profits market continued to pinch, with WP accounting for only 7 per cent of Friends’ life and pension business compared with 10 per cent in 2003 and 26 per cent in 2002.

Chief executive Ben Gunn says that besides employee benefits consultants’ concerns over the F&C and Isis deal, which may have cost them up to 20m in lost APE business, the fall in new pension business also reflects the strength of the group’s new business growth in 2003, which was up by 14 per cent.

He says the group did not actively chase stakeholder business last year, focusing on higher margin business such as single-premium and corporate business. Gunn remains upbeat about the group’s positioning ahead of A-Day and expects strong growth across the firm’s pension book.

Group operating profits rose by 29 per cent from 266m to 344m New business contributed 83m to Friends’ profitability, up from 80m.

The profit margin on this new business also grew from 18.6 per cent to 19.1 per cent year on year.

Gunn says: “There are good reasons why growth eased back and they are not permanent underlying reasons. We have a very solid platform to grow this year and into 2006.”

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