Friends Life Group is the new name for Resolution - Old thread here




Friends Life Group Limited is a FTSE 100 listed company focused on providing financial security for over five million customers, with a heritage dating back over 200 years.

Our strategy is focused on helping customers to save for and achieve a good standard of living in retirement and on providing them with financial protection during their working lives.

The business is made up of three divisions:

A specialist Heritage division, looking after customers with products which are no longer actively marketed for new business. The heritage division also include Friends Life Investments, providing asset management services for Group businesses
The UK division, which provides core business lines of corporate benefits, retirement income and protection.
The International division, which provides savings, investment and protection products for expatriates and local nationals in Asia and the Middle East.
Friends Life has the expertise and experience to meet the changing needs of its customers as the life and pensions market continues to evolve. Friends Life is a sustainable business which supports its customers’ financial futures throughout all key life stages whilst creating value for shareholders by growing cash generation and generating returns.

Company Website

Financial Calendar

Recent Broker notes

BarChart Indicators

Recent Market news

Friends Life Group Fundamentals

Half Yearly Report

Strong cash performance

· Sustainable free surplus £163 million, up 15% (30 June 2013: £142 million); on track to deliver £39 million uplift in expected return

· Continued good performance in Corporate Benefits, net fund inflows of £0.4 billion

· Value of new business down 24% to £65 million as predicted trends continue, with full impact of the Budget(i) still to emerge

· IFRS based operating profit before tax of £159 million

· MCEV operating profit before tax of £193 million

Capital position robust, dividend secure

· Available shareholder assets £917 million

· IGCA(ii) surplus £2.2 billion, coverage ratio 235%

· Economic capital surplus(iii) £4.0 billion, coverage ratio 193%

· Interim dividend of 7.05 pence per share (30 June 2013: 7.05 pence per share)

Business highlights and successful agreement of Lombard sale(iv)

· Disposal of Lombard announced and share buy-back increased to £317 million

· Peak of auto-enrolment activity in the first half of 2014 delivers 648 schemes with 108,000 net members added to defined contribution pension schemes during the first half of 2014

· Strong growth in Protection, APE is up 21%

· Agreement to reallocate circa £800 million of annuities from with-profits funds, subject to regulatory non-objection, resulting in a SFS benefit of circa £7 million p.a. from 2015

· £200 million syndicated loans mandate further underpins expected return in 2015

· Re-platforming in International division remains on track for new business in the third quarter of 2014 and for all in-force in 2015; interim dividend passed and full year dividend to Group under review

· Excellent progress made towards preparing the launch of new retirement propositions:

- Adding retail functionality to My Money Corporate Wrap platform

- New flexible propositions being developed to offer alternative solutions for customers

- Customer engagement model enhancements fully underway

Share buy back programme

Friends Life is delighted to announce that regulatory approval has been received to increase the share buy back programme (the "Buy Back Programme") announced on 11 July 2014 from £261 million to £317 million. The Buy Back Programme will be funded from the £261 million upfront cash consideration from the sale of Lombard International Assurance S.A. and Insurance Development Holdings AG (together, the "Lombard Business") together with £56 million from existing surplus cash resources in the Company. The £56 million increase in the Buy Back Programme is equivalent to the amount of the vendor loan note issued as part of the Lombard Business sale. This demonstrates the strength of the Company's balance sheet and the Board's confidence in the Company's financial strength.

Third Quarter 2014 Interim Management Statement 11th November.

This has moved ip very nicely over the past few trading sessions. I am finally in profit on all my holdings.

Interim Management Statement

Strong sales performance
· Corporate Benefits APE of £465 million, up 14%
· Protection APE of £70 million, up 11%
· Retirement Income outperforms the market with sales volumes down 12%, exceeding expectations and reflecting strong customer engagement
· Improving operating backdrop in FPI, with third quarter APE of £32 million up more than a third on the run-rate of the first two quarters of 2014
· Corporate Benefits positive net fund flows of £0.6 billion driving assets under administration to £21.4 billion
· Group VNB of £94 million is down £29 million, of which £24 million is the reduction in Retirement Income VNB
· Group APE of £690 million (30 September 2013: £670 million)
· Group PVNBP1 margin 2.4% (30 September 2013: 3.1%)
Strong capital position maintained
· IGCA2 of £2.2 billion, representing a coverage ratio of 233% (30 June 2014: 235%)
· Group available shareholder assets ("ASA") of £911 million
Operational highlights
· Disposal of Lombard completed and £317 million share buyback commenced
· Completion of the £760 million reallocation of annuities from with-profits funds, which will generate £7 million of sustainable free surplus ("SFS") p.a. from 2015
· Agreement to reallocate a further circa £650 million of annuities from with-profits funds, subject to regulatory non-objection, resulting in a SFS benefit of circa £5 million p.a. from 2015
· Good progress made towards preparing the launch of new retirement propositions in April 2015
· International IT platform project delivery is on track with the majority of new policies now being written on the new platform
· Application of enhanced investment strategy progressing well with further funds invested in syndicated loans and private placements

Looking good Skinny. Do you hold any of these?

Yes - I've got a longer term holding (Resolution) in my SIPP and a more recent ISA purchase.

Deutsche Bank Hold 326.40 326.40 330.00 335.00 Reiterates

That's Deutsche's target and an interesting point chart wise.

It's at 335p already. The target should be higher I would have thought.

FLG......Copied from Twitter.......

Thanks to another tweeter yest for flagging this one up,FLG breaking out into a resistance free area. 375p then 385p sp Targets. Very little resistance.

WOW.....skinny have you seen this after hours take over statement for FLG......talk about getting lucky........ bought just after 9.30 am.....big aswel.

Aviva agrees to possible 5.6 bln stg deal to buy Friends Life

21 Nov 2014 - 18:05

Nov 21 (Reuters) – Insurer Aviva Plc said it had reached agreement on a possible deal to buy Friends Life Group Plc for 5.6 billion pounds ($8.8 billion) in stock.

Under the terms of the possible offer, Aviva would offer Friends Life shareholders 0.74 shares for each Friends Life share. ...

The deal indicates a value of about 398.9 pence per Friends Life share, a 15 percent premium to the stock's Friday close.

Friends Life shareholders would also receive an amount in cash equal to any Friends Life final dividend for the 2014 financial year. (1 US dollar = 0.6388 British pound)

(Reporting by Roshni Menon in Bangalore; Editing by Saumyadeb Chakrabarty) ((roshni.menon@thomsonreuters.com; within UK +44 20 7542 1810, outside UK +91 80 6749 1136; Reuters Messaging: roshni.menon.thomsonreuters.com@reuters.net;)

What a super bit of news to end the week. Jackpot!

From one of the many articles this weekend. A crowning deal for Aviva's turnaround champion

"For investors on both sides the deal therefore appears to make sense. Although Friends’ shares have rebounded in recent weeks, the company’s strategic position from a stand-alone perspective is weak. It is operating a near-closed book on its individual business, and although its corporate book is growing, on its own Friends looks vulnerable.
For Aviva investors, the rationale is also clear. A larger company, greater cash flow – in line with Wilson’s strategy – and the potential for an enhanced dividend in time.".

Suspension of share buyback programme

Canaccord Genuity Buy 365.80 340.00 400.00 Reiterates

Credit Suisse Neutral 365.80 325.00 350.00 Reiterates

Aviva paying 'good price' for Friends Life, says Canaccord Genuity

Mon 24 November 2014 09:22 | A A A
No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

Canaccord Genuity has lifted its target price for insurance firm Friends Life from 340p to 400p and repeated its 'buy' call, saying that the £5.6bn takeover offer from rival Aviva is a "good price" for shareholders.

The companies announced that they had agreed on terms for a possible all-share combination. Friends Life shareholders would get 0.74 Aviva shares for each Friends Life share they own, valuing Friends Life at 398.9p per share.

This is equal to a 15% premium to its closing price on Friday and a 28% premium to the three-month average, and close to its embedded value in the first half, Canaccord said.

Due diligence is now under way and Aviva has until 19 December to make a formal offer.

"We think this is a good price for Friends Life shareholders, as they should receive around embedded value for the business, albeit in shares, and not cash," said Canaccord analysts Ming Zhu and Ben Cohen.

While they have lifted their target price to equal the possible offer, the analysts said they see potential further upside from this level when they have more details about synergies from the deal.

"To a large extent, Friends Life's fair value will now be determined by Aviva's share price, while Aviva's share price will be determined by the enthusiasm by its shareholders for the industrial logic of the deal.

"Assuming an offer is made by 19 December, the details of planned synergies and cash-flow will be key to Aviva's share price performance."

Friends Life was trading 5.6% higher at 367.1p by 09:52 on Monday.

Canaccord Genuity has lifted its target price for insurance firm Friends Life from 340p to 400p and repeated its 'buy' call, saying that the £5.6bn takeover offer from rival Aviva is a "good price" for shareholders.

While they have lifted their target price to equal the possible offer, analysts said they see potential further upside from this level when more details about synergies from the deal are known

Bid for Friends Life by Aviva – it makes sense but should we buy Aviva shares?
By Robert Sutherland Smith | Monday 24 November 2014

The sheer scale of the proposed merger of Aviva (AV.) and Friends Live is a wonder to behold. It reminds us of the extraordinary degree of consolidation that has taken place in the life assurance industry over the last few decades.

The roll call of once thriving independent companies reads a little like the role of British battalions wiped out in the First World War; companies that once provided a lot of employment to a lot of people. The old Quaker Friends Life; Sun Life; The Commercial Union; General Accident, BUPA and no doubt many other names in the belly of the proposed new Leviathan to be rebranded I believe, the Friends Life Group.

It would be wonderful to think that it would also bring back the high ethical and trading standards of the Quaker founders in the nineteenth century but sadly, we cannot recreate the past. The proposed merger is also a testament to the maturity of the life business in the UK which reached a more corpse like condition as a result of the Chancellor’s decision to abandon the long established rule that pension savings were invested in Life company annuities

If this merger goes ahead it will bring the reported 16 million clients of the Friends Life Group into consolidation with the reported 31 million clients of Aviva; making at total 47 million customer base. Getting on for 80% or thereabouts of the total 60 million population of the UK though it has to be understood that many of those customers will be outside the UK; the Friends Life group has client contracts in 15 national territories outside the UK. The scales of economy, including lower unit costs of operation, that are ostensibly likely to be achieved in one go, if the deal is consummated, are pretty impressive. Moreover, as the Friends Life operating management is largely outsourced, it will probably reach the bottom line fairly quickly.

It is obvious that the older rationalization model of UK life industry has been undermined by the new regime on annuities; hence, the willingness to sell the Friends business at the right price and the willingness of Aviva to buy it. In that connection, if it is true that the bid value is some £5.6 billion, as reported, then the exit multiple appears to be 27 times Friend’s Life 2013 reported net profits of £204 million pounds. It is also a 13% premium to Friends Life last stated balance sheet net asset value. £4.9 billion (June 30th 2014). The mooted purchase price is also nearly 1.8 times reported revenue. So the business on those terms would not be sold cheaply - as one might expect. It is possible that another bidder might emerge but I assume that to be unlikely at this stage; though who knows.

Friend’s looks as though it has been run for cash generation. That will certainly help the newly enlarged company, if it comes into existence, to increase dividends; an important aim for Aviva. It will also be a stock that institutions are likely to want a full or fuller weighting in. But before we buy Aviva lets await a bit more detail, lets wait until the ink is dry on an agreement to merge!

hxxp://www.shareprophets.com/views/9147/bid-for-friends-life-by-aviva-it-makes-sense-but-should-we-buy-aviva-shares

Synergies from Aviva-Friends Life deal could be 'substantial', says The Share Centre
24 November 2014 16:04

The proposed tie-up between insurance groups Aviva and Friends Life Group could create "substantial synergies", according to The Share Centre, details of which still remain unknown.
The companies announced after the close on Friday that they had agreed on terms for a possible all-share combination. Friends Life shareholders would get 0.74 Aviva shares for each Friends Life share they own, valuing Friends Life at 398.9p per share or £5.6bn.

Sheridan Admans, investment research manager at The Share Centre, said: "Should the deal happen analysts believe synergies would be substantial, with Aviva's balance sheet benefiting as would its pensions and protection operations. Friends Life investors should benefit from improved growth prospects."

However, she warned that the merger is still "not a done deal".

"Friends Life investors may push for a higher premium or other interested parties may show their hand, however the latter is assumed to be unlikely given the size of the deal and the implication that may pose."

Due to the merger activity, The Share Centre has downgraded its rating on Aviva to 'hold' until more details are released, but said that any weakness in the share price might by a good entry point for potential investors given the positive long-term outlook.

Friends Life is also rated a 'hold'.