Setting new standards - Friends Life

ANNUAL REVIEW
CHAIRMAN’S STATEMENT GROUP CHIEF EXECUTIVE’S REVIEW ABOUT THE FRIENDS PROVIDENT GROUP UK LIFE & PENSIONS
Chairman’s
Statement
I am delighted to report on another year of good progress for the Friends
Provident Group. Last year, I pointed to the work we had done in
rebalancing and reshaping the Group to enhance our growth prospects.
In 2006, we have seen those prospects becoming reality across large parts
of our business, and have extended our international reach still further.
Our overall strong performance throughout the year is reflected in the
financial achievements as presented in this Report & Accounts.
Setting our sights still higher, towards the end of 2006 the Board set a new
Vision for the Group, which is ‘To be the standard by which all other providers
are judged’. We believe this properly reflects our desire and determination to
take a lead in lifting standards in our industry and so help restore the confidence
of consumers. This is vital. Our industry contributes so much, both to the
economy as a whole and to the financial wellbeing of individual families, but
needs to do more to earn the trust of those who place their confidence in our
hands. Addressing this is rightly a priority, and we intend to be a leading light.
In the UK marketplace, the focus of the media and the Government throughout
2006 has remained on pensions and the various options and opportunities for
change. The widespread lack of long-term saving certainly needs to be addressed
and we continue to contribute fully and effectively to the developing debate,
primarily through the Association of British Insurers. Although the Government is
preferring an alternative approach, we believe that the experience and expertise of
our industry makes it uniquely placed to partner the Government in any eventual
outcome. The increased attention on pensions, coupled with the greater clarity
brought about through recent rule changes, has led to more activity generally in
this market. As one of the leading providers, we have benefited significantly from
this, with pensions accounting for 73% of our total 2006 new business in the UK.
Overall, our share of the total UK market has risen to 5.5%, approaching double
where we were when we became a listed company in 2001.
Since that time, we have been able to increase the annual dividend for our
shareholders every year, in line with our stated policy. For 2006, your Board is
recommending a final dividend of 5.2 pence per share which would bring the
total dividend to 7.85 pence per share, a 2% increase over 2005. Total
Shareholder Return over 2006, which takes account of share price
movements as well as dividends, was 19.0% compared with
14.4% for the FTSE 100 Index of leading shares.
4 Friends Provident Annual Report & Accounts 2006