FPI’s IFRS operating profits fell 49% from £41m to £21m, in part due to a 22% fall in new business compared with the first six months of last year.
This fall is in line with those seen across the industry and tally with first quarter figures released by the Association of British Insurers last month.
FPI said the drop in volume was “driven mainly by a significant reduction in regular premium business”. It added that this has been due to “maintenance of pricing discipline and increased controls around business acceptance”.
Despite a 22% drop in sales volume, the value of the new business only fell by 10%, which FPI said had been achieved through increasing margins, new product structures and an increase in the higher-margin protection business.
The international segment comprises Isle of Man-based Friends Provident International, the overseas branch business of Friends Life (Overseas Life Assurance Business), German distributor Financial Partners Business AG, and a 30% interests in both Malaysian life insurance business AmLife Insurance Berhad and Malaysian family takaful business AmFamily.
The statement added: “The international results are relatively disappointing although they demonstrate a resilient performance, with stable funds under management, against a challenging economic and competitive background”.
It describes the pricing discipline and shift in new business mix to higher margin products as having “largely maintained the value of new business in a period when market and competitive pressures have reduced the overall level of new business volumes.”
Lombard’s first half performance is also identified as subdued with lower economic returns and one-off costs impacting the result.
The international business is currently in the process of a strategic review, and according to the statement, the results of this exercise will be announced before the end of 2012.
The latest update is that “the business has continued to invest in building capability and four new executives and a new non-executive chairman have been appointed. The roll-out of new higher margin product structure continues. The launch into Singapore in the second quarter of 2012 was successful and the Middle East and Hong Kong launches will be completed by the end of 2012.”