CompaniesMay 8 2013

Rise in Friends Life UK profits offsets international fall

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The Resolution group has reported a 9 per cent rise in profits to £38m in the three months to 31 March 2013 which has offset the “constrained” performance of the international division.

In its Q1 interim management statement published today (8 May), the group said the improvement in new business highlights the continued focus on profitable growth with new business written delivering higher returns at a lower cost.

Friends Life’s UK value of new business increased by 30 per cent to £35m compared to the same quarter in 2012, which reflects a strong performance in the retirement income business that supported by continued tight cost control across the division.

The contribution from the international division has been constrained by the actions taken over the past six months to restructure this business, Resolution said.

International new business sales volumes and contribution in the first quarter of 2013 are below those reported in the same period of 2012 reflecting reflecting the actions taken as part of the strategic review announced in November 2012.

Profits in its international division fell from £13m to £7m. The trends principally highlight the closure to new business in markets that are unprofitable, sub-scale or which do not fit with its risk and value focused strategy, as well as the impact of its review, Resolution said.

The corporate benefits business delivered profit of £3m in the first quarter of 2013, down £2m on prior year, mainly as a result of the reduced new business volumes in the period.

Andy Briggs, group chief executive, said: “The Group has continued to make good operational progress during the first quarter of 2013, achieving record value of new business written at a lower cash cost with further delivery of targeted cost savings.

“This performance has been led by the UK division with strong growth in the retirement income and protection businesses with corporate benefits in line with our expectations.

“The underlying trends in our chosen markets are encouraging and our strategy is delivering results. We remain optimistic about the opportunities for profitable and cash generative growth going forwards.”