News Release

27 January 2009

Friends Provident 2008 trading update - Making good progress

Highlights

• Strong capital position maintained, with Insurance Groups Directive excess capital at 31 December 2008 estimated at £0.85 billion and resilient to further market movements
• Total full year life and pensions new business down by 11% to £1,005 million APE² (2007: £1,135m)
• Fourth quarter total life and pensions new business down by 4% year-on-year on APE basis and up 4% on PVNBP² basis
• International life and pensions full year new business up by 19% to £456 million APE (2007: £385m), comprising Friends Provident International up by 13% and Lombard up by 24%
• Increasing momentum with key UK group pensions distributors leading to 26 scheme wins in final quarter of 2008 which are expected to deliver approximately £20 million of APE during the first half of 2009
• Annual cost savings run-rate of £25 million at 31 December 2008 reflecting continued progress in fourth quarter, remaining well on track for £40 million annual run-rate by end of 2009
• Dividend policy unchanged

Trevor Matthews, chief executive officer of Friends Provident plc, said:

“Friends Provident is in good shape despite the turmoil in financial markets and the uncertain economic environment. We have made excellent progress cutting costs, excess capital remains healthy, and our dividend policy remains unchanged.

“The business is also well diversified. Our international operations, Friends Provident International and Lombard, achieved over half of our total fourth quarter sales and around 45% of new business for the year as a whole.

“The operating environment in the UK and overseas remains tough. In UK group pensions, we continue to write good levels of new business for employers who already operate a scheme with us, and we are increasing our activity with distributors to win new schemes. We are now being invited to pitch for new schemes with almost all of our key target intermediaries, and as a result we achieved 26 successes in the quarter.”

- Ends -

View the full release (PDF)

Notes to editors

1. There will be a conference call for investors and analysts at 9.00am GMT hosted by Trevor Matthews, CEO and Charles Bellringer, interim CFO. Dial in telephone number +44 (0)20 7162 0025 (reference: 822787). A recording of this call will be available for 7 days by dialling: +44 (0)20 7031 4064 (access code: 822787).
   


2. Headline new business figures are presented on the Annualised Premium Equivalent (APE) basis, representing annualised new regular premiums plus 10% of single premiums. The Present Value of New Business Premiums (PVNBP) basis represents new single premiums plus the expected present value of new business regular premiums.
   


3. Financial Reporting Calendar:

   Financial Reporting Calendar:
   Friends Provident plc Preliminary Results	17 March 2009
   Friends Provident plc Interim Management Statement and Quarter 1 New Business Announcement	28 April 2009
   Friends Provident plc Interim Results	11 August 2009
   Friends Provident plc Interim Management Statement and Quarter 3 New Business Announcement	27 October 2009

   
   
4. Certain statements contained in this announcement constitute 'forward-looking statements'. Such forward-looking statements involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements, from time to time, of Friends Provident plc, its subsidiaries and subsidiary undertakings or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such risks, uncertainties and other factors include, among others, adverse changes to laws or regulations; risks in respect of taxation; unforeseen liabilities from product reviews; asset shortfalls against product liabilities; changes in the general economic environment; levels and trends in mortality, morbidity and persistency; restrictions on access to product distribution channels; increased competition; and the ability to attract and retain personnel. These forward-looking statements are made only as at the date of this announcement and, save where required in order to comply with the Listing Rules, there is no obligation on Friends Provident plc to update such forward- looking statements.