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Friends to sell F&C and Pantheon but retain Sesame

Friends Provident is to sell F&C, high-net worth IFA firm Pantheon and wealth management arm Lombard and cease development of its wrap in a massive group restructure announced today.

After a thorough strategic review the firm has decided to focus on the life and pensions market and move away from wealth management.

Friends Prov also announced its quarter four results and now expects its profits for the year ending December 31, 2007 to drop to £300m, compared to £509m in 2006.

This is in part due to a £160m persistency charge the firm has announced it is to pay because of low persistency levels. The announcement saw Friends Prov shares drop by 10 per cent to 139p by 10am.

Friends has decided to retain Sesame. A statement says: “The nature of intermediary distribution may change in the future. The retail distribution review is the latest development in this area.

“Whether it produces change and, if so, the nature of that change, is uncertain. While this uncertainty persists, maintaining a direct interest in distribution also gives the Group better insight into the effect of any changes on intermediaries.

“Sesame fits the strategy as it is a large distributer of mortgages and protection policies. Its target market segment is also attracted to insurance bonds and pensions. The business is profitable and is trading in line with the Boards’ expectations when it was acquired.”

Friends bought Pantheon in May 2007 for £33m at the same time as acquiring Sesame. It says the firm is profitable and has good growth prospects but does not fit with its strategy.

Friends Prov has outlined its new strategy which will involve a renewed focus on core segments of the UK and International life and pensions market. This will include continuing at least to maintain market share in the protection market.

For UK group pensions and annuities, Friends will stop paying initial commission on new schemes and will focus on acquiring larger schemes.

Internationally, the group says it will continue to pursue savings and investment, pensions and protection markets in areas with attractive margins.

Informed Choice director Martin Bamford says this is a positive step for Friends Provident, following a troubled few months.

He says: “I think we’re going to see more of this in the near future. It’s a good thing for life companies to focus on just one or two things, rather than doing a lot of things poorly.”

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