Philip Moore on Wednesday quit as chief executive of Friends Provident as the life assurer announced a strategic review following last month’s collapse of its proposed merger with Resolution.
Shareholders had become impatient to hear what plans the group had in the wake of the ending of the £7.9bn merger plan and sent the shares higher at the open of trading on Wednesday as investors welcomed the news of the departure. By mid-morning the shares were up 9.7p or 6 per cent at 169.2p.
The strategic review is likely to look at all possibilities including a take over by another company or a break up into three constituent parts and piecemeal sale. Friends’ three divisions are UK life and pensions, international life and pensions, and asset management.
In the summer Zurich Financial Services considered making a bid approach to Friends. JC Flowers, the US private equity group, had looked at Friends earlier this year as did Axa the French insurer. However, the deterioration in credit markets has made deals more difficult.
It is understood that the board thought that Mr Moore was too closely associated with Friends’s recent past to be the right person to conduct the strategic review, and that it would be better to have a fresh look at its options.
Sir Adrian Montague, chairman of Friends since 2005, is becoming executive chairman and will work with Jim Smart, finance director, on the review which Friends hopes to conclude by the end of January. It is not expected to appoint a new chief executive before that time.
Friends said that a pay-off for Mr Moore had yet to be agreed, but would reflect his contract with the company. His remuneration in 2006 totalled £636,000 and he has a one year contract.
Friends had agreed the £7.9bn nil-premium merger with Resolution in July, although initially Mr Moore had been opposed to the idea. However, Friends was won round to the deal because it was finding its ambitious expansion plans were being constrained by its cash flow and capital. It fell apart when Resolution accepted another bid.
With the Resolution bid gone, Friends will have to find another way to finance those expansion plans.
Friends has been seen as a bid target since its demutualisation and flotation in 2001, and many expected it to have been snapped up some time ago.
Sir Adrian said, “this has been a challenging year for the group.” He said while the board remained confident about prospects, “it is right that we should take a hard look at the group’s strategy to ensure that we are delivering the highest value available to our shareholders. The board has concluded that this requires a change in the management team.”
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