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Friends Provident shares drop as full-year profits are down 3%

Friends Provident is already warning that a challenging market for mortgage protection insurance could endanger its targets for new business growth of up to 200m by 2008.

In todays results it reported a 3% fall in full-year profit blaming a weak performance in its asset management division.

Underlying pretax profit for the year stood at 509m, on a European Embedded Value Basis, down from 524m the previous year.

Following the news, share prices dropped from 202 pence to a low of 183.35, but were back up to 187.25 at 11.50am today.

Philip Moore, chief executive of Friends Provident, says the insurer remains committed to its target but that protection is an important part of this and the market had slowed more than expected.

He says: “Overall, Friends Provident put in a very strong operational performance last year underpinned by our continued focus on expense and risk management.

“Our approach remains to invest for profitable growth whilst managing cash in the UK.

“We are confident that we have three businesses well positioned to deliver excellent long-term future growth.”

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