Friends Life has today announced the creation of Friends Life Investments (FLI), a new inhouse asset management business which will launch in the second half of 2012.
The asset manager will be seeded with approximately £8bn of recaptured assets and will initially focus on fixed income, the company said.
It will initially be run by chief investment officer, Mark Versey, and will be a 100% owned subsidiary of the Friends Life Group.
The intention is for the initial focus of FLI to be on fixed income assets in respect of annuity liabilities, shareholder assets and assets backing other non profit liabilities.
Further investment classes will be considered as the business grows, the company said.
The business will use an outsourced model with investment operations managed by a third party administrator.
This inhouse asset manager is expected to support the UK business units and Friends Life will add to the current 30-strong in-house team of investment professionals.
The estimated one-off costs associated with the setup of this unit are £5m with ongoing running costs of £4m per annum.
Andy Briggs, chief executive officer of Friends Life (pictured), said:"The launch of Friends Life Investments marks a significant development for our business.
"Together with the partnership with Diligenta to outsource IT and customer service, we have today demonstrated a significant reduction in our cost base and a clear strategic commitment to our core markets in the UK."
The existing Friends Life Asset and Liability Management team will continue to have oversight and control over non unit-linked asset management suppliers including: governance of suppliers, investment policy, strategic asset allocation and management of exposure to financial risk from the asset portfolio.
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