Friends Life has launched Friends Life Investments (FLI), its in-house asset management business with £6bn assets under management.
It said the business would support the growth of core product areas, such as annuities and over time would cover more of the assets of the wider group's 5 million customers.
It will initially focus on managing the group's existing fixed income assets - which cover annuity liabilities, shareholder funds and assets backing other non-profit liabilities. Further investment classes will be considered as the business expands.
A team of 15 people will operate under chief investment officer Mark Versey, head of fixed income Michael Wright, and director of asset management operations Andrew Brown.
In January, Friends Life recruited the award winning fixed income portfolio management team from LV= Asset Management led by Michael Wright and comprising John Hampton, Purna Bhudia and Nigel Bradshaw.
Andy Briggs, group chief executive of Friends Life said: "The launch of FLI marks a significant development for our business as we continue to deliver on our stated strategy for 2012 and beyond. It is also a further important step in our continued drive to reduce costs across the business as we will now manage our own assets at lower costs than paying asset management fees to third parties.
"The intention is for this new company to complement our existing investment expertise across our business and is evidence of our strategic focus in the UK."
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