Repositioning on track
Full Year
UK Life and Pensions APE (Annual Premium Equivalent) sales for the year were 3% up on 2004 with strong performance from SIPP and Investment Bonds. Canada performed well with insurance APE increasing by 17% year-on-year. Worldwide insurance APE fell by 6%, largely reflecting the impact of Germany, where the fourth quarter of 2004 had been exceptionally strong as a result of tax changes. Standard Life Investments performed strongly and worldwide investment sales increased by 200% in 2005.
Fourth Quarter 2005
UK Life and Pensions APE sales for the fourth quarter were down 12% to £221m (2004: £251m). In both individual and group pensions, our decision to reduce commission levels resulted in sales falling compared with the final quarter of 2004. Sales of SIPP and Investment Bonds increased 186% and 23% respectively. Canada had a strong fourth quarter and increased insurance APE by 66% (56% in local currency) to £65m (2004: £40m). This was driven by securing a number of large group annuity contracts in December. As previously stated, the final quarter in Germany was substantially below last year.
Standard Life's Group Chief Executive Sandy Crombie said:
"Our full year results show a clear shift of emphasis in our core UK Life and Pensions business towards investment-driven single premium business. We have made good progress in 2005 in developing products that will further alter the balance of our business. Overall, worldwide group new insurance business showed a 17% increase in new single premiums against a 20% fall in regular premiums. Our Canadian business finished the year on a strong note and Standard Life Investments capitalised on its excellent performance track record, with a large step forward both in new mandates and funds under management."
UK Life and Pensions
Standard Life continued its repositioning throughout 2005. APE sales increased
by 3% to £908m, with single premium business increasing by 13% over the
year whilst new regular premium business fell by 6%.
SIPP and Investment Bonds both performed strongly in 2005, each taking in over £1bn of single premium business. SIPP single premiums increased to £1,109m from £359m year-on-year, with Q4 sales rising to £329m from £117m. We believe that SIPP will continue to sell strongly, notwithstanding the recent government decision to exclude residential property from SIPP investments. Investment Bonds single premiums increased by 39% to £1,117m (2004: £801m) and for the quarter increased by 23% to £386m (2004: £315m).
Group pensions APE increased by 4% over the year as a consequence of strong performances in the first and second quarters, which were up 14%* and 36%* respectively. Sales then fell by 11%* and 19% respectively in the third and fourth quarters, as changes introduced to the company's commission structure began to impact. Individual pensions APE fell by 48% on last year following the reduction in commission rates introduced at the end of 2004.
Protection sales fell in the year to £6m (-57%) with the market remaining
difficult as a result of a slowing housing market and strong price competition.
During the year Standard Life successfully diversified its distribution by signing
a number of single and multi-tie deals, including those with Barclays Financial
Planning, Fidelity and Sesame. The company is now well positioned in both the
IFA and non-IFA market for the longer term.
A number of new developments are planned for 2006 which will help reposition the business further. Standard Life International Limited was launched in January 2006 and is selling its first offshore bond. The company also expects to begin to roll out its Wrap proposition by the end of March. This offers open achitecture to allow investment choice and a full range of tax wrappers. The Group is well placed for A-day on April 6th with a range of products designed to meet customer needs.
*refer to Notes to Editors, note 3.
Standard Life Investments
Standard Life Investments performed strongly throughout 2005 in both institutional
and retail markets.
Gross investment sales for the year increased by 200% to £5,917m. Total UK institutional gross sales reached £2,350m for 2005, an increase of 213% and the pipeline of new business remains strong for 2006. UK mutual funds gross sales increased 87% on 2004 to £605m.
Funds under management continued to grow, reflecting new business gains and strong markets, with total funds under management for Standard Life Investments rising over 20% to £118.8bn from £96bn over the year.
Third party funds under management increased by 54% over the year to £28.1bn, representing compound annual growth of 27% over the last five years.
At year-end, £10.4bn of property funds were managed by Standard Life Investments, which now ranks as the 11th largest property manager in the world.
The AAA Money Market Fund enjoyed another strong year with net average sales up 328% to £1,925m.
Standard Life Bank
In a difficult housing and competitive mortgage market, gross mortgage lending
fell by 26% over the year to £3.1bn. However, the bank's focus on customer
retention resulted in mortgages under management growing 4% to £10.6bn
at the year-end.
Standard Life Healthcare
Standard Life Healthcare experienced a fall in new regular premiums of 32% to
£20m. This is a result of a repositioning of the business to concentrate
on profitable segments of the private healthcare market.
We expect the legal completion of the acquistion of the private medical insurance (PMI) business of FirstAssist Insurance Services Limited to take place by the end of March 2006. This is expected to increase Standard Life Healthcare's share of the PMI market from 6% to 9%, adding over 200,000 customers.
Canada
Total new insurance APE sales increased by 17% (11% in local currency) to £184m
in 2005. The year finished strongly with APE sales in the fourth quarter increasing
to £65m, up 66%, partly as a result of strong group annuity sales, where
several large contracts were secured in December.
Customer concerns over the adequacy of retirement income led to an improving market for mutual funds, where Standard Life increased gross sales by 77% to £324m in 2005 (2004: £183m).
Germany
APE sales in the fourth quarter of 2005 were down 88% to £16m, with full
year sales falling 68% to £66m. This was as a result of tax changes introduced
from 1 January 2005, which were preceded by a one-off surge in new business
in the last quarter of 2004.
Ireland
APE sales increased by 26% in 2005 to £34m with strong sales in Q4. This
was due to a strong market coupled with Standard Life's move towards selling
a wider range of investment products. There was a significant improvement in
the second half of the year following the launch of the Synergy suite of products
and funds in Q2.
India
Standard Life's joint venture, HDFC Standard Life Insurance Company Limited,
performed well throughout 2005, reflecting strong market growth and an increasing
market share.
Download the Full 2005 New Business Announcement.
For further information please contact:
Media:
Barry Cameron 0131 245 6165 / 0771 248 6463
Scott White 0131 245 5422 / 0771 248 5738
Analysts/Investors:
Gillian Bailey 0131 245 1110 / 0788 975 2161
Notes to Editors