Uncertain Times Ahead For New Friends Boss

Sydney Morning Herald

Saturday February 2, 2008

Julia May in London

AS A qualified actuary, Trevor Matthews has presumably done some modelling on the risks of his defection this week from one of Britain's biggest insurers, Standard Life, to its rival, Friends Provident.

Regardless, he knows his future is uncertain, given that Friends is vulnerable to takeover - perhaps even before he takes the helm in July.

On Tuesday, the Australian "turnaround king" resigned as head of Standard Life's British life and pensions business, a day before the group's fourth-quarter results. When the Macquarie University graduate took over in 2004 the insurer was virtually unable to write new business, so shaky were its fundamentals.

With responsibility for 70 per cent of the kick-started company's business, Mr Matthews had been tipped to succeed Sandy Crombie as chief executive, but had reportedly become frustrated by Mr Crombie's refusal to outline a retirement plan and the board's failure to recognise him as successor.

Further signs of strain emerged as Standard Life confirmed it would enforce Mr Matthews's six-month notice period.

Mr Crombie said: "The protection for the employer is over their intellectual property rights. We can effectively hold him for six months.

"Standard Life has a great many developments in train. We wouldn't want them walking into a competitor while they remain very much alive for us".

Mr Matthews, 52, gained prominence as the managing director of Legal & General Australia until 1996, before a two-year stint at National Australia Bank. His appointment comes at a crucial time for Friends, which unveiled the conclusions of a two-month review on Thursday.

In a shift back to life insurance and superannuation, Friends paved the way for a sell-off of its 52 per cent stake in F&C Asset Management, and Lombard, its investment firm for high net-worth individuals, as well as Pantheon, its financial advisory business. It said it would cut 600 jobs - 15 per cent of its workforce - and halve its dividend next year, which immediately wiped 10 per cent off its market capitalisation.

Analysts are sceptical that the restructure will protect Friends from a takeover by the private equity firm J.C. Flowers, which said last week it was considering a bid.

© 2008 Sydney Morning Herald

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