Friends Life to pull £2.3bn of assets from F&C

F&C Asset Management has told investors it expects to take a £2.3bn hit to its assets under management this year when Friends Life withdraws money from its annuities business.

F&C said in an update this morning its former backer has given it 12 months notice of the withdrawal of the assets.

In the statement, F&C said:"On 9 November 2011 Friends Life announced its intention to launch an in-house asset management subsidiary in the second half of 2012.

"Friends Life has since given F&C 12 months notice of its intention to withdraw £2.3bn of assets, principally in respect of its annuities fund, in December 2012."

However F&C said the impact on current year revenues would be minimal.

Elsewhere, the group reported total assets under management had fallen from £103.2bn at the end of September to £100.1bn at the end of December.

F&C said the outflows had principally been caused by withdrawals from strategic partner assets, which totalled £3.9bn.

This includes insurance funds and a £1.3bn institutional gross outflow from the BCP Pension Scheme, as a result of a decision by the Portuguese government to nationalise the past pension obligations of the country's largest banks.

It said the Portuguese government has since initiated a further withdrawal, representing £1bn of assets, this month.

On the positive side, the group saw performance of assets overall add £2.5bn, although this was partially countered by a currency hit of £1.6bn.

Edward Bramson, executive chairman of F&C, said: "We have made good progress on the strategy we set out in October, showing a modest net inflow, primarily in fixed income mandates, into our third-party institutional business and having a further £1.2bn of won but unfunded mandates in the pipeline.

"The cost reduction programme we set out in our strategic review remains on schedule. We are continuing to work on initiatives to deploy the resources this programme will release into areas of growth for F&C and to the overall improvement of shareholder value."

Shares in the group were down in early trading, off 2.15% or 1.4p, to 63.75p.