Marketing Plan - Friends Provident

Term Paper, 2006

22 Pages, Grade: 1,3


Table of Contents

Table of Illustrations

1. Mission Statement

2. Financial Summery

3. Market Overview

4. SWOT Analysis

5. Assumptions

6. Marketing Objectives and Strategies

7. 3-year Forecast and Budget implications

List of References

Table of Illustrations

Friends Provident, Total UK new business sales

Friends Provident, Audited income statement, Total and UK Life and Pension

Friends Provident, Profit from continuing operations, 5-year comparison

Friends Provident, Net earned premiums by product type

Friends Provident, Present value of new business premiums, UK total and by product type

Friends Provident, Net earned premiums

Friends Provident, Present value of new business premiums

Friends Provident, Shares

UK life insurance and pension market value

UK life insurance and pension market value

Summary of new regular premium life business

Timetable, events 2000-2010

Age-standardised mortality rate for all causes, by gender, in England & Wales, 1901-2005

Market value forecast, Datamonitor, 2006-2009

Friends Provident, 3-year forecast and budgets

1. Mission Statement:

“Creating value through values”

Friends Provident plc is the holding company of the Friends Provident Group and is a constituent of the FTSE 100 Index since its demutualization in 2001.

Specialising in general financial services, the Group employs nearly 5,000 staff in its three business segments: UK Life and Pension (FPLP), International Life and Pension (FPIL) and Asset Management (F&C). Friends Provident was founded in 1832 on Quaker principles and their basic purpose is the provision of financial help to families (originally) and all other individuals. (Friends Provident plc, 2005, #8).

The focus of this marketing plan will be on the UK Life and Pension business, operating through Friends Provident Life and Pension Limited (FPLP). The Chief Executive of FPLP is Ben Gunn (55), who gained a lot of experience since joining the Group in 1998.

The main aim of the company is to grow shareholder value, by targeting selected UK life and pension markets. FPLP serves more than 2.5 million individual and corporate clients, mainly via Independent Financial Advisors (IFA) and offers a range of life and pension products. They have strong ethical principles and focus on lower risk and high net worth market segments.

The company is one of the top ten in the UK for attracting new business, with an increase in sales by 21% to £3192 million in 2005. (Friends Provident plc, 2005, #8).

2. Financial Summary

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* Sum of movement in insurance contracts liabilities and movement in investment contracts liabilities

Overall, 2005 was a good year for Friends Provident plc. The group increased their profit by 68% to £ 456 million (2004: £271 million). Compared to an income of £258 million in 2004, FPLP increased its profit by 111.2% to £545 million. This equals a 119.5% contribution to the group’s output.

The chart on the right shows that Friends Provident’s earnings reached a five-year high in 2005, after demutualising in 2001

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An interesting change is the high increase in the total number of investment contracts liabilities by 270.4% up to £3308 million in total (see row 9 of the income statement). Insurance and investment contract policyholders are charged front-end fees at the inception of the contract. The consideration received is deferred as a liability lasting over the expected term of the contract. Therefore, I assume the increase in liabilities is due to the 85% rise in contribution to profits from new businesses in total. UK total new business increased 21%.

Let us now look at the UK Life and Pensions business’ results per product type. FPLP’s net earned premiums for each product type can be seen in the table below.

FPLP net earned premiums by product type on IFRS basis for the year ended 31 December 2005

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For further analysis, I find it necessary to have a look at the changes in UK total new businesses. The results I stated so far where calculated on an IFRS (International Financial Reporting Standard) basis. IFRS only recognises the statutory surplus on new business and defers some acquisition costs. Therefore, on most product lines the IFRS year one “profit” is negative, offset by surpluses in future years. Besides using IFRS, Friends Provident analysed its financial performance on an EEV (European Embedded Value) basis. EEV explicitly recognises new business profit in year of sale. The performance of FPLP new business is shown in the next table.

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I have summarised the UK net earned premiums (IFRS), and the present value of UK new business (EEV), below. If we compare the charts we can clearly see the different calculation methods explained earlier. Every decrease in net earned premiums (IFRS) is an increase in the present value of new business premiums (EEV) or vice versa.

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(Calculated on EEV basis for the year ended 31 December 2005)

Investment products remain the strongest contributor to total UK net earned premiums with £363 million. A general recovery of this market led to increased sales of new business by 15.5%. The subdued housing market led to a decrease of protection new business premiums of 8.5%. With their focus on larger schemes, FPLP increased sales of group pensions by 48.1%. Individual pensions only make up for a small proportion of total net earned premiums. The product was relaunched in April 2005. Annuities new business was down 13.6%, but the product remains the second strongest contributor to total net earned premiums.

Finally, let us have a look at the development of Friend Provident’s shares from 2002 to date. In the chart below we can see that the company’s shares dropped enormously after 9/11, when stock markets world wide fell. Prudential plc is FPLP’s main competitor. Their share was affected likewise. Over the years the shares recovered. Currently, Friends Provident’s shares are higher than its competitor’s shares, but below the FTSE 100 Index.

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(Source: Yahoo! Inc., [Online], #20).

3. Market Overview

The life and pension market compromises life insurance and retirement savings products, except contributions made to the state social insurance. 237 companies in the UK are authorised to carry out long-term insurance business. The market is therefore highly competitive.

The UK life insurance and pension market grew by 8.4% in 2005 to reach a value of £99.3 billion. After a heavy decline from 2000 to 2003, the market achieved positive growth in 2004 and 2005. Prudential plc remains the top company with £8184 million premiums in 2005. Friends Provident holds rank 11. (Datamonitor, 2005, [Online], #4; ABI, 2006, [Online], #1).

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Excerpt out of 22 pages


Marketing Plan - Friends Provident
Anglia Ruskin University
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Marketing Plan, Friends Provident, UK Pension Market, Marketing Strategy, Financial Summary, SWOT
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Jenny Haberer (Author), 2006, Marketing Plan - Friends Provident, Munich, GRIN Verlag,


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