Standard Life buoyed by new business boost

STANDARD Life today reported a "modest" increase in overall new business but sales at the mutual giant’s UK life and pensions arm fell.

The Edinburgh-based group, which plans to demutualise next year, said the dip in new business at the core UK division would continue in the short term as the full impact of the restructuring takes effect.

Total sales in the UK life and pensions business amounted to £939 million in the 13 and a half months to December 31, against £957m in the preceding 12-month period. The figures were given on an annual premium equivalent (APE) basis - a standard industry measure used to iron out volatility.

Group-wide, total insurance APE sales came in at just over £1.4 billion, an increase of 11 per cent. Sales in Germany surged to a record £219m.

Europe’s largest mutual insurer said it was confident of its future prospects. Unveiling the latest sales figures, chief executive Sandy Crombie said: "After adjusting for the seasonal factors in the extended 2004 business year, we believe these results are a modest advance over the previous year.

"When viewed against the backdrop of the major strategic changes announced last year, these figures demonstrate that Standard Life continues to enjoy strong support. We will continue to reshape our business during 2005 and are confident of Standard Life’s prospects for the future."

Next year, Standard Life will invite a special vote by members to approve its change in corporate status. In total, the mutual has 2.6 million members around the world who hold voting rights. It requires 75 per cent of the members who vote in 2006 to back the motion to demutualise and convert to a stock market listing for the change to take place.

Mr Crombie recently turned down £500,000 in bonuses and the group is cutting hundreds of jobs and tightening up operations in preparation for the proposed float.

Despite the reduction in full-year sales, today’s figures revealed that Standard Life had increased its share of the UK life and pensions market in the third quarter of 2004, from 8.4 to 8.6 per cent, while its share of the IFA market rose 0.4 points to 11.5 per cent. It said the repositioning of the business had resulted in the group identifying "a number of opportunities for profitable growth".

New product launches have included the self-invested personal pension (SIPP), which has received an "encouraging" response.

Meanwhile mortgages under management at Standard Life Bank exceeded £10bn for the first time, and third-party funds under the control of the group’s investment arm reached a record £18.3bn, up from £15.3bn.

Mr Crombie added: "We have taken significant steps to change the terms on which we write business in areas such as individual and group pensions. We believe the decisive action we are taking will lead to Standard Life being one of the major winners in the UK life and pensions market."