Resolution ditches plans for Friends Life IPOs

Resolution has shelved its plans for IPOs of the Friends Life business and will examine other exit strategies as its operating profit before tax more than halves at £137 million.

Resolution announced in March that it had set a 2014 deadline for a ‘self managed’ exit of Friends Life, headed by chief executive Andy Briggs (pictured) involving its split into two businesses, OpenCo and HeritageCo.

But it said in its interim results for the first half of the year, Resolution said it had scrapped the plans of separate IPOs for the UK Go to Market and the Heritage business and was now looking at other exit strategies.

'Resolution Limited, the ultimate parent company of Friends Life Group plc has announced that it will no longer seek a specific exit event for its UK Life project and consequently the previously announced self-managed exit plan of separate IPOs of the UK Go to Market and Heritage business units is no longer envisaged.’

OpenCo consists of the UK Go to Market business units, the overseas businesses, Sesame Bankhall group and associated support businesses.

HeritageCo consists of the UK Heritage business and associated support businesses including Friends Life Investments, Friends Life's listed debt and the UK pension fund.

Friends Life group operating profit before tax more than halved to £178 million, down from the £406 million reported over the same period in 2011.

The company said the results reflected ‘lower expected investment returns on the in-force book, [and] a disappointing performance in the international business partly offset by reduction in costs of new business.’

Friends Life UK operating profit also decreased to £137 million, down £227 million from the £364 million reported over the same period in 2011. After the removal of the group’s one-off items, the UK profit is £32 million lower than in the same period in 2011.

Inflows into the UK Heritage business dropped to £20 million, compared to the £30 million reported in the first half of 2011 which the company said reflected the closure of bond products to new business in the second half of 2011.