Friends Provident is expected to use today's full-year new business presentation to announce plans to remain independent and rebuild its reputation as a life and pensions provider.

As he unveils the conclusions of a two-month strategic review, Sir Adrian Montague, the chairman, is expected to unveil plans to sell Lombard, its tax-efficient investment company for high net worth individuals, which has been valued at up to £1 billion.

He is also likely to put Friends's 52percent stake in F&C Asset Management up for sale. F&C has a separate listing, valuing the company at £946 million last night,

However, management contracts worth about £200 million in revenues over the next six years would be assigned to F&C in the event of a move by Friends to reduce its holding below 50 per cent.

Any bidder would be expected to pay a premium for these, valuing Friends's 52 per cent stake at up to £700 million.

Offloading these two assets would position Friends, under the incoming chief executive Trevor Matthews, as a domestic life and pensions player with a growing overseas operation. Some analysts speculated yesterday that Friends may also embark on a round of cost-cutting.

Consensus forecasts are that Friends Provident will report full-year new business sales for 2007 of about £8.25 billion. Keefe, Bruyette & Woods is predicting sales of £8.17 billion, which would be a 15 per cent increase on the previous year.

“Although the 2008 outlook is poor, we expect the strategic review to provide a rerating catalyst,” KBW said earlier this week. Shares in Friends dropped 7.1p to 155.2p yesterday, valuing the insurer at £3.78 billion.

Friends Provident has been in limbo since the collapse of an £8.5 billion merger with Resolution, the closed life funds specialist, in December. Philip Moore was ousted as chief executive and Sir Adrian took over the day-to-day running of Friends. He retained Jim Smart, the highly regarded finance director, who had planned to quit following the merger.

Peter Eliot, at MF Global, said: “If Friends Provident were to announce the sale of F&C and Lombard, we estimate that its embedded value could rise to 200p. Concerns over cashflow and funding would disappear, it would have a respected chief executive in place who would likely turn around the remaining business.”

The most likely buyer of the F&C stake is the former Foreign & Colonial fund manager itself. As soon as Friends reduces its stake in F&C below majority, the management of Friends's pension business is assigned automatically to the fund manager for ten years, beginning in 2004.

Unravelling the management contracts would be complex and could put off an external buyer of the assets.

F&C might also use the stake sale to try to mount a management buyout and take the business private.

F&C, whose chief executive is Alain Grisay, declined to comment on its intentions before Friends detailed the findings of its review.

It said all options were available in the event of a sale.

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