FRIENDS FIRST, the fifth-largest life insurer in the country, has announced plans to cut 147 jobs, just over a quarter of its 540 staff, due to the decline of life and pension sales and the financial crisis.
The company said it would be closing its lending business, Friends First Finance, with the loss of 98 jobs, and seeking an additional 49 redundancies in its main life insurance business.
Chief executive Adrian Hegarty said the company planned to make 68 staff redundant in the finance arm over two months, with the other 30 staff managing the business down over five to seven years.
The bulk of the firm’s employees work in Dublin, he said.
The company planned to secure the other 49 job cuts by the end of this year and the voluntary redundancies would be open to staff in Dublin, Cork and Galway, he said.
Staff were informed of the changes yesterday. The company will consult employees and unions in the coming month.
Mr Hegarty described the company’s decision as “difficult” but “necessary” due to the lack of available credit at viable rates, combined with the economic slump.
Mr Hegarty said the core business of Friends First Finance was small and medium-sized business, lending to the agricultural and manufacturing sectors with some personal and motor lending.
The firm was “greatly impaired” by the credit crunch as it borrowed money from other banks to lend on to customers, he said, and that borrowing on the inter-bank market was “no longer sustainable” in the current market.
“We will run down that book but it will take a few years to manage that out,” he said.
The division had €618 million in loans outstanding in June and had taken a €35 million charge on bad debts in the first half of the year, leaving Friends First with a loss of €25 million for the period. The company made a profit of €2 million for the same period last year.
The firm embarked on its cost-cutting plans following the results.
Friends First is restructuring the life business due to the downturn of life and pension sales, which have fallen 40 per cent since the start of the year. The company had outperformed the overall market decline as its sales fell 28 per cent in the first half.
Mr Hegarty said the decision to reduce the life business workforce “reflects the changing face and reduction in size of the life and pensions sector”. He hoped the changes would mean the company can perform profitably and provide “long-term secure employment into the future”.
He said Friends First remained “an integral part” of Eureko, the Dutch insurance company.
Friends First grew gross written premiums to €136 million in the first half, up from €134 million for the same period last year, increasing its market share to about 7 per cent in June from 6 per cent last December.
