JC Flowers, the US private equity investor, is seeking a meeting with Friends Provident, after Sir Adrian Montague, chairman of the embattled UK life assurer, demanded to know whether it was going to be the subject of a takeover bid or not.

The provocation came as Friends, which has recruited Trevor Matthews from Standard Life to be its new chief executive, announced the departure of Jim Smart, its finance director, and disclosed a worse than expected fall in 2007 profits.

“Now is the time for them to come clean,” said Sir Adrian. “Is there a proposition here or not?”

JC Flowers, which has been stalking Friends for the past two months, immediately responded that the private equity group would “welcome the chance to meet them as soon as possible”.

But Sir Adrian countered: “Fireside chats are out. We want to know what the beef is. We want to know what the meat of the proposal is.”

The shares rose 4 per cent to 124p on hopes of a bid from JC Flowers, with one leading shareholder describing Friends’ comments as “encouraging”.

Shares in Friends have fallen 24 per cent this year, and the shareholder indicated that a price around Friends’ embedded value of 160p may now be acceptable.

However, Sir Adrian rejected the idea that Friends was less valuable now than in January, when JC Flowers first said it was considering a bid. The private equity group is believed to have indicated that it would be prepared to pay 175p per share. Friends wanted at least 200p.

Sir Adrian also said Friends had received “expressions of interest from [parties] other than management” in the insurer’s 52 per cent stake in fund manager F&C; Lombard, its European wealth management business; and Pantheon, an intermediary, which are all in effect up for sale.

The comments came as Friends reported a fall in operating profit calculated under European embedded value principles from £509m ($1bn) to £16m, less than the figure of about £20m signalled in January. The slide came after £461m of charges, including a £158m charge for customers surrendering policies early.

The pre-tax loss under international financial reporting standards was £113m, down from a £491m profit. A final dividend of 5.3p, down from 5.2p, makes a total for the year of 8p, compared with 7.85p last time.

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