08.11.2006
New business results - nine months to 30 September 2006



  • Worldwide insurance APE1 sales up 26% to £1,119m (2005: £890m) year to date, with a 41% increase in the third quarter of 2006

  • UK Life and Pensions APE sales up 35% to £921m (2005: £684m) year to date, with a 56% increase in the third quarter of 2006

    - Self Invested Personal Pension (SIPP) and drawdown APE sales up 109% to £182m (2005: £87m)

    - Investment bond APE sales up 81% to £132m (2005: £73m)

  • Lapses in UK pensions continue above the long-term trend, as reflected in the provisions made at the half year

  • Third party funds under management up to £34.7bn (31 December 2005: £29.1bn2, 30 June 2006: £32.5bn2)

All comparisons above and in narrative below are in sterling unless otherwise stated3. All sales figures below are on an APE basis unless otherwise stated.


Group Chief Executive, Sandy Crombie, commented:

"I am pleased to report Standard Life's worldwide new business sales have shown accelerated growth in the first three quarters of 2006.
"UK Life and Pensions sales in the first 9 months of 2006 exceeded the 2005 calendar year total with SIPP and Investment Bonds continuing to lead the way. A-day has had a significant positive impact on new business and I am confident we will continue to be one of the net winners with our SIPP product, which enjoyed its strongest ever month for sales in September. Our performance has been built on our first class service, strong suite of products and deep relationships with intermediaries.
"Continued excellent investment performance by Standard Life Investments has helped us to grow our third party funds under management by 19%2 since the end of 2005.
"Our progress since listing as a public company reaffirms our confidence in our future business prospects."
UK and Europe Life and Pensions

UK Life and Pensions sales for the first nine months increased by 35% to £921m (2005: £684m), which surpassed the 2005 full year total of £908m. This was assisted by a 56% increase in third quarter sales to £327m (2005: £209m). Sales on a PVNBP4 basis were £6,923m for the first nine months of 2006 which also exceeded the 2005 calendar year total of £6,455m. PVNBP sales for the third quarter were £2,593m.

Consistent with our focus on profitable areas of the market, sales growth continues to be driven by single premium business, which has increased 60% compared with regular premium growth of 10% for the year to date. While SIPP, Investment Bonds and TIP5/PPIP6 have performed particularly well, every product line in the UK Life and Pensions suite has seen an increase in sales. Our UK business continues to benefit from our market leadership in SIPP and the heightened activity in the pensions market due to A-day.

Sales of SIPP & Drawdown7 in the first nine months of 2006 increased 109% to £182m (2005: £87m). Third quarter sales increased 181% to £76m (2005: £27m) as our early mover advantage allowed us to capitalise on a growing SIPP market. SIPP experienced its strongest ever month for new business in September 2006 with APE sales of £27m. At 30 September 2006, SIPP assets under management, including both insured and non-insured SIPP, were £3.4bn compared to £1.3bn at 31 December 2005. The average SIPP case size was £163,000 at 30 September 2006 with 85% of single premium sales into SIPP in the third quarter representing new inflows to the company.

We expect SIPP to be the vehicle of choice for consolidation in the UK pensions market. Our experience and reputation for service mean we are confident we will continue to be a major beneficiary of the growth in this market. In October 2006 we were pleased to announce we have been added to a select list of SIPP providers for the administration of Life and Pensions business written by UBS.

Net pensions' inflows8 continued to be positive during the third quarter although there remains uncertainty around the long-term effects of the A-day reforms on customer behaviour. In pensions, lapses continue above the long-term trend, as reflected in the provisions made at the half year. We continue to monitor carefully the current level of lapses.

Group Pensions remains the largest single product by APE sales volume in our UK Life and Pensions business. Sales totalled £337m for the first nine months of the year (2005: £314m). The third quarter was particularly strong with sales increasing 35% to £109m (2005: £81m). The year-to-date increase can be attributed to the introduction of Group SIPP where there have been total sales of £34m since launch in January 2006.

Investment performance has been the key driver for higher sales of Investment Bonds, TIP and PPIP. Investment Bonds increased 81% to £132m (2005: £73m) while TIP and PPIP rose 58% to £123m (2005: £78m). As previously announced Standard Life will provide Citigroup with the investment platform for four defined contribution pension schemes. We expect to include over £80m of APE for this mandate in our fourth quarter sales.

Annuity sales increased 33% to £32m (2005: £24m) as business was received from consumers who had deferred retirement until after A-Day and our demutualisation. Over 90% of annuity sales in the first nine months of 2006 came from customers with maturing Standard Life pensions.

Standard Life Germany sales for the nine months to 30 September 2006 were 39% lower in local currency at £31m (2005: £51m), reflecting the exceptional sales in the first quarter of 2005 caused by changes to domestic tax legislation. The third quarter 2006 German result shows an improving picture with sales increasing 13% in local currency to £11m (2005: £9m). In October 2006 Standard Life Germany launched a new unit linked product.

Standard Life Ireland sales for the nine months to 30 September 2006 were 59% higher in local currency at £27m (2005: £17m) following the continued success of the Synergy suite of products launched in 2005 and the introduction of new products based on the UK SIPP platform this year.

Canadian Life and Pensions

Sales in Canada for the first nine months of 2006 declined 7% in local currency to £121m (2005: £119m) following the management actions to reorientate towards profitable lines.

We continue to target the Group Savings and Retirement market where we witnessed a 32% increase in year to date sales in local currency to £72m (2005: £50m). However, sales volumes in the third quarter decreased 15% in local currency to £11m (2005: £14m). This market is currently characterised by reduced quote activity as the industry focuses on retention of the existing client base.

Individual Insurance, Savings and Retirement sales were 33% lower in local currency at £38m (2005: £51m) following the repricing of our main universal life product in 2005.

Group Insurance sales were 41% lower in local currency at £11m (2005: £18m) in a market impacted by lower average case sizes and aggressive pricing.

We expect sales will recover in the fourth quarter. In October we secured significant schemes in Group Savings and Retirement and Group Insurance.

Asia

In India, Standard Life has two joint venture partnerships with HDFC: a life insurance company HDFC Standard Life Insurance Limited, in which it holds 18.6%, as at 30 September 2006, and HDFC Asset Management Company, in which it holds 49.9%. Standard Life's holding in HDFC Standard Life Insurance Limited changed during 2006 and the results for the period to 30 September 2006 are based on a weighted average holding of 17.7% (9 months to 30 September 2005: 26.0%). Sales for HDFC Standard Life Insurance Company Limited increased 54%9 to £99m (2005: £65m) of which Standard Life's share was £17m (2005: £17m).

In China, Heng An Standard Life is making encouraging progress and in October 2006 opened a new branch office in Jiangsu province; the largest insurance market in mainland China.

Standard Life Investments (SLI)

Continued investment outperformance, which has driven further mandate wins, and improving equity markets have seen SLI's total funds under management increase to £129.7bn at the end of the third quarter of 2006. Third party funds under management have increased by an underlying 19%2 from £29.1bn2 at the end of 2005 to £34.7bn at the end of the third quarter in 2006.

The majority of this growth is due to net third party inflows of £3,886m which equates to over 13% of Third party funds under management at the start of year. Within this, net inflows for investment products were £3,121m (2005: £3,521m).

SLI is experiencing its strongest year for mutual fund sales since SLI was launched in 1998, with net inflows of £920m for the first nine months of the year. Net inflows in the third quarter were £236m, building on the sales momentum generated during the first half of the year.

In October 2006, SLI announced that the Select Property Fund had grown to £780m in the 12 months since its launch, making it one of the fastest growing retail funds launched in the UK over that period.

Standard Life Healthcare (SLH)

SLH's continued focus on writing profitable SME10 business, and the competitive pressures in that market, resulted in sales of £15m for the first nine months of 2006 comparable to the corresponding period in 2005. Third quarter sales of £5m were also in line with last year.

Standard Life Bank (SLB)

The UK fixed rate mortgage market was highly competitive in the first half of 2006 and this, coupled with a continued focus on profitability rather than volume, resulted in a fall in gross mortgage lending for the nine months to 30 September 2006 of 8% to £2,111m (2005: £2,290m). However sales volumes improved in the third quarter of 2006 and lending for that period increased 6% to £895m (2005: £848m).

Mortgages under management were £10.3bn at 30 September compared to £10.6bn at 31 December 2005. At the end of the third quarter 2006 arrears rates continue to be significantly lower than the industry average at 16bps (30 June 2006: 17bps).

Savings balances grew in the 9 month period to £4,175m (31 December 2005: £4,119m) largely due to a growth in SIPP cash deposits to £228m (31 December 2005: £82m).

ENDS

Read the full Quarter 3 New Business Results.

For further information please contact:

Media:

Scott White 0131 245 5422 / 07712 485 738
Barry Cameron 0131 245 6165 / 07712 486 463
Emma Wylie 0207 872 4154 / 07712 486 444
Neil Bennett (Maitland) 0207 379 5151 / 07900 000 777

Equity Investors:

Gordon Aitken 0131 245 6799
Conor O'Neill 0131 245 6466
Gillian Bailey 0131 245 1110

Debt Investors:

John Cummins 0131 245 5195
Andy Townsend 0131 245 7260
Georgina Marshall 0131 245 9798

Notes to Editors

  1. Annual Premium Equivalent (APE) sales comprise new regular premium sales plus 10% of single premiums.

  2. During the third quarter 2006 SLI reclassified £1.0bn of investments from Insurance funds under management to Third party funds under management. These investments represent both traditional mutual funds and individual segregated funds, which are similar to mutual funds but backed by a 75% capital guarantee and are now included within Third party insurance contracts. This reclassification has been reflected in the "Market & other movements" column in the tables on pages 11 and 14. The effect of restating Third party funds under management would be an increase from £28.1bn to £29.1bn at 31 December 2005 and an increase from £31.5bn to £32.5bn at 30 June 2006. Allowing for this restatement the growth in Third party funds under management in the 9 months to 30 September 2006 was 19%. There has been no impact to Total funds under management.

  3. All percentage changes shown for new business are calculated in sterling. The principal average exchange rates for nine months to 30 September 2006 are £1: C$2.05 (nine months to 30 September 2005 £1: C$2.25) and £1:€1.46 (nine months to 30 September 2005 £1: €1.46). Funds under management are calculated using the closing exchange rate as at period end. The principal closing exchange rates used as at 30 September 2006 are £1: C$2.08 (31 December 2005 £1: C$2.01) and £1: €1.47 (31 December 2005 £1: €1.46).

  4. Present Value of New Business Premiums (PVNBP) is calculated as 100% of single premiums plus the expected present value of new regular premiums.

  5. TIP is a Trustee Investment Plan designed to meet the needs of Trustees of exempt approved occupational pension schemes (defined benefit, defined contribution and SSAS schemes).

  6. PPIP is a Personal Pension Investment Plan. It is a version of TIP available to managers of Self Invested Personal Pensions (SIPP) that are administered externally to Standard Life.

  7. Of the £182m APE sales of insured SIPP & Drawdown written in the 9 month period to 30 September 2006, £165m is insured SIPP sales and £17m Drawdown sales.

  8. Net pensions' inflows are defined as total premiums and deposits less total claims (including deaths, surrenders and maturities) for Individual Pensions, SIPP & Drawdown and Group Pensions products.

  9. The growth percentages quoted for India relate to the results of HDFC Standard Life Insurance Limited, rather than the growth in Standard Life's share of the joint ventures new business.

  10. SME is defined as small and medium enterprises.

  11. All financial information in this release is unaudited.

  12. The insurance operations new business shown within the attached tables includes certain products which do not fall within the scope of "insurance contracts" as defined by IFRS4 "Insurance Contracts" as they do not contain sufficient insurance risk. However, the classification of products into investment or insurance operations is consistent with previous new business reports and is in accordance with FSA recognition rules for new business.

  13. All comparators are with the first nine months or the comparable third quarter of 2005 unless otherwise stated.

  14. Department of Work and Pensions (DWP) rebate premiums of £26m APE (2005: £10m) have been received in the 9 month period to 30 September 2006. Of this total, £19m APE (2005: £8m) was received in the third quarter.

  15. All 2006 sales figures span the demutualisation of The Standard Life Assurance Company on 10 July 2006.

  16. There will be a conference call today for newswires at 7.30am (BST) hosted by Sandy Crombie, Group Chief Executive and Trevor Matthews, Chief Executive of Standard Life Assurance Limited. Dial in telephone number: +44 (0)20 7162 0125. Callers should quote Standard Life Newswire Conference Call.

  17. There will be a conference call for investors and analysts at 8.30am (BST) hosted by Sandy Crombie, Group Chief Executive and Trevor Matthews, Chief Executive of Standard Life Assurance Limited. Dial in telephone number +44 (0)20 7162 0025. Callers should quote Standard Life Investor and Analyst Conference. A recording of this call will be available for replay for one week by dialling +44 (0)207 031 4064. The conference reference number will be 723285.



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