29th Oct 2014 10:54
LONDON (Alliance News) - The pace of Standard Life PLC's growth in the near term may be hit by difficult investment conditions, Chief Executive David Nish warned on Wednesday, as the FTSE 100 long-term savings and investments company reported a rise in assets under administration in the first nine months of the year.
"Although investment markets are unsettled and may affect the near-term pace of asset and revenue growth, we are very well placed for the future. We have the products, experience and proven investment performance to help our customers and clients in all of our markets to save and invest, so that they can look forward to their financial futures with confidence," Nish said in a statement.
Speaking to journalists in a conference call, Keith Skeoch, the head of Standard Life's investments arm, said the return of volatility has buffeted the markets.
"That volatility comes from three sources: economic uncertainty associated with the prospect and worries about deflation in Europe and the withdrawal of quantitative easing which could happen in the States tonight. There's also the removal of liquidity from the markets associated with banks cutting back on investment banking operations, and then you throw into the mix geopolitics with everything going on in the world," Skeoch said.
"The market's discounting an awful lot of difficult news," Skeoch added. "I think what we need to see is evidence of sustained economic growth coming from outside the UK and US. We need to see the cash held on company balance sheets actually being put to work and into capital investment to sustain economic recovery and I think we're probably quite a way from visibility on both of those."
The warning came as Standard Life said group assets under administration from continuing operations rose to GBP290.0 billion at the end of September, from GBP214.7 billion at the start of January. The increase was driven by GBP4.3 billion of net flows and the acquisition of Ignis Asset Management. The GBP290.0 billion figure includes GBP60.9 billion of assets managed by Ignis and excludes GBP30.8 billion of assets of its now discontinued Canadian operations.
In the UK, Standard Life added 290,000 new customers through auto enrolment, which was introduced in the UK in 2012, including 117,500 in the third quarter alone. It boasted UK retail and corporate fee business assets under administration of more than GBP100 billion and said its investments arm continues to perform strongly in volatile markets, with third party assets under management from continuing operations up 13% to GBP1.03 billion in the year to date including acquisitions.
Big changes in annuity regulations in the UK resulted in a reduction in UK annuity sales of 55% in the the first nine months of the year, with third-quarter sales down 67%. Standard Life said the changes mean that outlook for annuities remains uncertain with a significant reduction in demand and a step down in the profitability of its spread/risk business expected in the future.
However, Standard Life has its eye on the potential for people who might once have bought an annuity to go into drawdown instead, an area in which the company said it is "well positioned" for future growth.
Paul Matthews, Standard Life's UK and Europe chief executive, told reporters the company is seeing "roughly" what it has been expecting in annuities but that the result of the regulatory changes will be clearer when the new rules come into play next year.
Fee revenue from continuing operations is up 13% to GBP1.03 billion in the year to date including acquisitions.
Standard Life is waiting for regulatory approval for the sale of its Canadian long-term savings and retirement, individual and group insurance business and Canadian investment management business to Manulife. Completion is expected in early 2015 and will increase Standard Life's focus on fee business. The group also plans to return GBP1.75 billion to shareholders after the sale.
Standard Life completed its acquisition of Ignis Asset Management from Phoenix Group Holdings in July for GBP390 million.
Standard Life shares were down 0.9% at 381.80 pence on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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