Best Friends

5 March 2003 By Chris Hughes

The UK life assurer is still looking to grow the dividend, only at a lower rate and depending on equity returns. The company should not be punished too harshly for giving greater clarity on its payout than its rivals have.

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Friends Provident, the UK life assurer, warned that it may no longer grow its dividend in excess of inflation, although it planned to continue increasing the payout. The new pledge was contingent on the company's planning assumptions being met, including a 7% return on equities in the medium term.

The group reported achieved operating profits for 2002 down £16m at £305m, following a £56m charge reflecting revised assumptions for mortality rates. It raised its divided by 3.6%, to 7.25p per share. Embedded value was 150p per share.

In line with rivals, the company also announced cuts to annual bonuses paid to withprofits policyholders, and warned of further cuts in the future.

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