Friends expands Europe business

LIFE insurer Friends Provident today confirmed plans to extend its reach into the market for Europe's high-rollers with a deal worth up to e400m (£278m).

The group is making an initial payment of e265m for Lombard International Assurance, a Luxembourg-based seller of single premium unit-linked bonds to wealthy Europeans seeking to mitigate inheritance tax.

The all-share deal, which depends on a two-year earn-out for the full price to be paid, will bring a windfall e120m to Lombard founding chairman John Stone.

It will also bring relief to other shareholders Aberdeen Asset Management and Standard Life, both of which are currently facing their own problems.

Separately, Friends revealed that the recent merger between its existing Isis fund management operation with the rival Foreign & Colonial, has hit its pension business.

New pensions business sank by 9.1% to £57.8m in the third quarter. Satchell blamed the downturn on strong comparatives, the delay over pensions simplification legislation and advisers putting Friends products on ice until the F&C deal beds down.