Aug. 6 (Bloomberg) -- Friends Life Group Ltd., the U.K. insurer created by Clive Cowdery, posted a 24 percent drop in the value of new business in the first half and increased its share buyback plan to 317 million pounds ($534 million).
The value of new business, a measure of future cash flow, fell to 65 million pounds in the six months to June 30 following changes announced in the government’s budget in March, the company said in a statement today. The share buy-back program rose from 261 million pounds.
The insurer said in May that it would miss its earnings target this year after it forecast that annuity sales may tumble as much as 70 percent. In March, Chancellor of the Exchequer George Osborne scrapped rules that pushed retirees to buy annuities with their pension savings. First-half operating profit fell 7 percent to 159 million pounds, Friends Life said.
“The first half of 2014 has witnessed some of the most far reaching changes to the U.K. life sector for more than a generation.” Chief Executive Officer Andy Briggs said in the statement. “The biggest area of growth” in the retirement market will be in the “flexible income space,” the CEO said.
The company fell about 1 percent to 322.5 pence in London trading, bringing the decline this year to 8.9 percent.
The insurer’s interim dividend was unchanged at 7.05 pence a share. The company said in July that it planned to return cash to shareholders after Blackstone Group LP agreed to buy its European wealth-management unit for as much as 356 million pounds.
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