By Marcus Leach

Friends Life today (Wednesday) announced the creation of Friends Life Investments - a new in-house asset management business - which will launch in the second half of 2012.

The new business will initially be run by the Chief Investment Officer, Mark Versey, and will be a 100% owned subsidiary of the Friends Life Group.

The creation of Friends Life Investments (FLI) will enable the business to leverage its existing investment capability, in investment strategy and Asset liability management.

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 business will use an outsourced model with investment operations managed by a third party administrator.

"The launch of Friends Life Investments marks a significant development for our business," Andy Briggs, chief executive officer of Friends Life said.

"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 intention is for this new company to build on existing expertise across our business and is further evidence of our strategic focus 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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