Profits on an EEV basis fell to £211m from £264m for the same period in 2007.

New business fell by 29 per cent to £67m, down from £95m last year, and UK life and pension business was down by 12 per cent from £361.8m to £319.6m.

Friends Provident Inter- national managing director Rocco Sepe blames the fall in profits on the economic conditions.

He says: “We have been here before and we are determined to see it through. We do not expect conditions to ease in the second half of the year but we are determined to be there when cli-ent demand picks up again.”

Friends says it has yet to find a buyer for its 53 per cent stake in F&C and is considering a pro-rata distribution of its stake to shareholders if a buyer does not become available.

In January, Friends introduced a revised strategy to maximise value for shareholders by concentrating on manufacturing and administering life and pension products.

This included selling its stake in F&C as well as wealth management arm Lombard and IFA firm Pantheon. It has taken Pantheon off the market due to a lack of acceptable bids and is struggling to offload Lombard.

Chairman Adrian Montague says: “The strong headway made in implementing our new strategy, coupled with other timely initiatives taken to reduce our exposure to financial markets, has enabled the company to weather the sharp economic downturn more favourably than otherwise would have been the case. Our business has no need to raise capital to fund growth and our revised dividend policy remains sustainable. The strategy is not dependent on achieving asset sales but any proceeds from any asset sales that are completed will still be returned in full to shareholders.”