Friends Provident pledged a renewed focus on protection and group pensions today after revealing profits dived to just £16 million in 2007.
The decline from the £509 million reported in 2006 had been expected after the company wrote-off £440 million through accounting changes and because of customers cashing in policies earlier than expected.
It recently announced plans to down-size and focus on its "established strengths" in group pensions and protection business, while selling its majority stake in investment group F&C Asset Management and other non-core operations.
The company said the "swift and efficient" implementation of the new strategy was now its focus and that it would provide a further update in August. It said today: "The new strategy is designed to address the poor underlying economics of trading by elevating profit above volume growth."
In protection, Friends said it will seek to at least maintain market share and to continue to enter new segments. Volumes of new pensions business will fall as a consequence of a more selective approach, but Friends said the quality of new business written will increase.
As well as pensions and protection, including mortgage-based products, Friends has operations in annuities and savings and investments.
Despite today's update, the company's strategy may be taken out of its hands if New York-based private equity group JC Flowers decides to launch an offer.
Flowers had been mulling a proposal worth £4 billion in January, but reports at the weekend suggested a figure closer to £3.5 billion was now more realistic after a sharp fall in the insurer's share price.
The group has been left vulnerable to a takeover after the collapse of a merger with closed life fund manager Resolution, a deal which was gatecrashed by rival suitor Pearl.
The merger's demise raised concerns that Friends Provident would not have enough financing to fund expansion.
Friends has hired Trevor Matthews from Standard Life as chief executive, but he will not be able to start until the summer. The company employs almost 4,000 staff, excluding the F&C business, across offices in locations including Manchester, Exeter, Dorking and Salisbury.
