Friends shake-up to cost 600 jobs

Friends Provident share price

Insurance company Friends Provident is set to cut about 600 jobs as part of a radical overhaul aimed at saving £60m.

The firm is looking at selling two of its business units and is thinking of selling its majority stake in investment arm F&C Asset Management.

Friends also said it would take a £440m charge against its annual results, wiping out most of its profits.

It has been reviewing its strategy since last year's planned £8.7bn merger with rival Resolution collapsed.

This week, Friends Provident announced that Trevor Matthews, the head of Standard Life's UK operations, was to become its new chief executive.

However, the firm said on Thursday that Mr Matthews was unlikely to join the firm until July.

Analysts said that this could make the firm vulnerable to a takeover bid from US private equity firm JC Flowers, which said last week it was thinking of making an offer.

Worries over prospects for the company pushed shares in Friends Provident down 12.4% to 136p in late morning trade.

'Anxious'

The jobs being cut at Friends Provident will go from its UK and international insurance business by 2009, the company said.

Excluding F&C Asset Management, Friends employs almost 4,000 people, with offices in Manchester, Exeter, Dorking and Salisbury.

The union representing many of Friends Provident's staff, Unite, said news that jobs were to be lost was "extremely disappointing".

"The current climate in the financial services sector means that employees in the industry are increasingly anxious and insecure about their future," said Unite deputy general secretary Graham Goddard.

Friends also announced that it would take a charge of £160m as more of its customers cash their policies in early.

Combined with a £280m charge related to accounting changes, Friends said that its annual pre-tax profit would be cut to about £20m, against £509m the previous year.

Separately, Friends reported that group new business rose by 8% to £7.66bn in 2007, short of analysts' expectations.