Eurozone 'really worrying people'- Friend Prov Int

Friends Provident International (FPI) has reported strong Q1 results despite "the toughest economic back drop" in "fragile" Europe.

International sales for the three months to 31 March were £57m, up 49% on Q1 09, excluding Luxembourg-based estate-planners Lombard.

Friends Provident director of international operations Rocco Sepe says international markets are starting to revive, especially in Asia.

But recent economic turmoil in the Eurozone is "really affecting confidence", and he says he is "not taking anything for granted".

"Germany is the toughest economic backdrop. Its banking sector is still embattled, and this is affecting confidence in Europe," Sepe says.

Germany is leading the cash drive for a €110bn (£95bn) bailout of bankrupt Greece, with Europe's largest national economy stumping up €22bn despite fierce domestic opposition.

Harsh conditions attached to the bailout have led to rioting in Greece, and stark warnings of a ruthless new regime for Eurozone countries if the monetary union is to survive.

"Just when it looked as if markets were behaving they are now looking fragile again," says Sepe.

Asia is "unquestionably the region poised for good growth" says Sepe, with the UK market continuing to be "really tough".

Friends Provident UK life and pensions sales fell 3% to £88m in Q1, it reported today.

"Asia is much more buoyant because it is free from the baggage of Old Europe like huge Government borrowing and an unfunded state sector," says Sepe.

"It has none of the big state safety nets of Europe, and has low taxes which give it a near to medium term advantage. However, it is not all positive. Many Asian economies are export driven and there is a potential problem if demand for their goods falters in Europe and elsewhere."

Sepe says competition will intensify in Asia as more companies consolidate and look East, but a threat is also emerging from maturing local providers.

Prudential is currently trying to allay FSA fears on its solvency ahead of a bid to exploit Eastern opportunities through a $21bn rights issue to fund the purchase of AIA, the Asian arm of US insurer AIG.

There is much market speculation Prudential will sell its UK business, with Clive Cowdery's takeover vehicle Resolution, which bought Friends Provident for £1.86bn last year, a potential buyer.