Friends Provident’s profits nosedive by 97%

Ailing insurer Friends Provident has revealed pre-tax profits of £16m for 2007 – a whopping 97% reduction compared with 2006’s figures.

Profits declined from £509m in 2006, calculated on a European Embedded Value basis.

Under the EEV method, insurance firms’ value is calculated according to indicators such as investment performance because of the long-term nature of insurance policies.

The results, together with the planned departure of FP chief financial officer Jim Smart, are likely to strengthen the takeover speculation surrounding the company, which is in the middle of a strategic review.

Private equity firm JC Flowers, one of the initial bidders for Northern Rock, is rumoured to be putting together a takeover bid for FP, having first indicated its interest in the company last May.

Adrian Montague, executive chairman of FP, has said the firm would entertain a formal approach but claims that JC Flowers has not made one yet.

He says: “We are currently focussed on implementing our strategic review so we can gain benefits from it swiftly and efficiently.

“What will emerge from the review is a self-financing, transparent and ex-panding company built around expertise in manufac- turing and admin- istering life and pension products.”

Montague in-sists FP’s strong trading position in the protection and pension markets means it has solid foundations for future growth.

But he says his top priority is profiting from growth in global markets through FP International.

Montague adds: “We are confident about returning the company to profitable growth.

“I’m proud of our staff for the way they are sustaining the high levels of service that have become the hallmark of the company.”