FRIENDS PROVIDENT is putting the finishing touches to a strategic review, which is likely to lead to a sale of all or part of the embattled life insurer.

Bankers said the review should be completed within weeks. Sir Adrian Montague, the executive chairman who is leading the review with finance director Jim Smart, is understood not to have ruled out putting the entire business up for sale.

Montague, who is being advised by Goldman Sachs and JP Morgan Cazenove, has promised to reveal the new strategy by the end of next month.

Analysts are divided over whether Friends has an independent future.

Britain’s fourth-biggest life insurer, which has a market value of £3.7 billion, launched the review after its planned £8.4 billion merger with Resolution collapsed in November. The failure also led to chief executive Philip Moore being ousted after pressure from shareholders.

Friends has been forced to admit that it needs to raise about £600m via a debt issue to grow its new business. However, some sceptics believe it could struggle to raise the funds because of the turmoil in the credit markets.

The insurer is understood to be looking at revamping its core UK life business, including a plan to slash commissions paid to brokers and withdrawing from selling more capital-inten-sive products. One suggestion is that it could quit writing group pension policies.

Another likely option would be to sell off Lombard, its international arm for wealthy customers, which is thought to be worth about £700m. Friends could also sell its 53% stake, worth £510m, in F&C Asset Management. Such a move would be a radical step because Friends has consistently argued its control of the independently-listed fund manager differentiates it from rival insurers.

Zurich Financial Services, Old Mutual and Axa have all been touted as possible bidders. Analysts at Deutsche Bank have calculated Friends could be worth up to 195p per share if broken up. Its shares closed at 159p on Friday.

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