7th Aug 2007 07:01
Standard Life plc07 August 2007 Standard Life plc New Business Results - six months to 30 June 2007 7 August 2007 • Worldwide life and pensions sales1 up 31% to £8,181m (2006: £6,235m). • Interim results will report an increased overall margin from full year 2006. • UK life and pensions sales up 45% to £6,954m (2006: £4,802m). - Individual SIPP* sales up 82% to £2,556m (2006: £1,406m). - Group Pensions sales up 49% to £1,487m (2006: £995m). • Standard Life Investments worldwide investment net inflows up 61% to £5,021m (2006: £3,120m). - Third party funds under management up 20% to £46.1bn (31 December 2006: £38.5bn). - Total funds under management up 6% to £140.6bn from £132.1bn (31 December 2006). All comparisons are in sterling unless otherwise stated2. All sales figures areon a PVNBP basis unless otherwise stated. All comparators are with the firsthalf of 2006 unless otherwise stated. *Individual SIPP includes Insured SIPP &Drawdown and Non-Insured SIPP. Commenting on the results, Group Chief Executive Sandy Crombie said: "Our strong new business performance is continuing. UK life and pensions saleshave increased by 45%, building upon a strong comparative period in 2006, andour third party funds under management continue to reach new highs. "We have enjoyed great success with a range of asset accumulation products,delivering higher sales at an increased overall margin. "We are launching new products into our chosen markets, and this is beingsupported by excellent investment performance and first-class service. I amconfident this will enable Standard Life to grow new business further in thefuture." Standard Life group Standard Life has delivered strong new business results during the first half of2007. Worldwide life and pensions sales increased by 31% and Standard LifeInvestments net inflows grew by 61%. Our Interim results released on 4 September 2007 will report a significantincrease in PVNBP margin compared to the Pro forma Full Year 2006 figure of1.4%, due to this strong sales growth and the continuing improvement inefficiency. UK Financial Services Our UK financial services division has seen growth across all major productcategories in the first half of 2007. Life and pensions new business volumesincreased by 45% to £6,954m, driven largely by continued growth in SIPP andother pensions products. Sales of pensions products increased by 49% and lifeproducts by 26%. Gross mortgage lending and healthcare sales increased by 29%and 10% respectively. Individual SIPP sales increased strongly by 82% to £2,556m (2006: £1,406m),resulting in Individual SIPP funds under management growing to £6.3bn3 (31December 2006: £4.3bn). Sales have benefited from the increase in contributionlimits introduced at A-day and the implementation of new SIPP regulations. At30 June 2007 we had 36,800 SIPP customers (31 December 2006: 25,200) with anaverage case size of £172,000. Customers continue to take advantage of our SIPP functionality and investmentflexibility with sales of Non-insured SIPP doubling year-on-year compared to a71% growth in Insured SIPP. At 30 June 2007 37% of SIPP assets were invested innon-insured funds (31 December 2006: 33%). Standard Life's Wrap proposition continues to be rolled out and developed withIFAs. At the end of the second quarter there were 149 IFA firms using theplatform (31 December 2006: 88 IFA firms) and 4,300 customers (31 December 2006:900 customers) with an average fund size of £140,000. At 30 June 2007, fundsunder administration on the Wrap platform had increased to £0.6bn (31 December2006: £0.2bn). We have experienced accelerated growth in Group Pensions, with sales increasingby 49% to £1,487m (2006: £995m), largely due to increasing volumes of GroupSIPP. Second quarter sales benefited from a large group stakeholder schemere-written as a Group SIPP4. We expect this trend to continue and drive furthersales of Group SIPP, which now accounts for 31% of total Group Pensions sales.We believe our excellent customer service and strong product proposition havebeen major factors in our ability to retain and grow our Group Pensionsbusiness. Trustee Investment Plan (TIP) and Personal Pension Investment Plan (PPIP) salesincreased by 35% to £1,038m5 (2006: £767m), driven by strong investmentperformance. Life sales increased by 26% to £1,123m (2006: £889m), including a 19% increasein Investment Bond sales to £1,039m (2006: £874m). Sales of our Offshore Bond,launched in January 2006, increased by 460% to £84m (2006: £15m), with the bulkin the second quarter (£60m). This reflects the increasing popularity of theproduct as well as the introduction of wider investment options and bespokecharging, which have enabled us to attract larger case sizes. Standard Life's UK Annuity sales increased by 53% to £257m (2006: £168m). Thisrate of increase largely reflects lower sales levels in the first half of lastyear due to A-day and Standard Life pensions policyholders deferring thepurchase of an annuity ahead of our demutualisation. We continue to strengthen our distribution capability in the UK life andpensions market by diversifying across channels whilst maintaining strong growthin the traditional IFA sector. Sales generated through channels other thantraditional IFAs now represent 40% (H1 2006: 26%) of new business. Thisincrease principally reflects the growth in sales through Employee BenefitConsultants and multi-tie and single-tie distribution arrangements. Net flows for life and pensions business were positive at £1.2bn in the firsthalf of 20076. Within this total, net pensions inflows were £1.5bn comparedwith £1.8bn in H2 2006. Excluding institutional TIP, underlying net pensionsinflows strengthened from £0.6bn in H2 2006 to £1.1bn in H1 2007. Net lifeoutflows amounted to £0.3bn in H1 2007 compared to £0.6bn in H2 2006. Theimproving trend in underlying net flows has been achieved against a backdrop ofclaims activity across our life and pensions portfolios being above expectedlevels. Gross mortgage lending increased by 29% to £1,571m (2006: £1,216m) resulting inmortgages under management standing at £10.5bn as at 30 June 2007 (31 December2006: £10.4bn). We continue to maintain a balance between growth and margin,and our mortgage portfolio remains of the highest quality with an arrears rateof 0.18% at 30 June 2007, compared with an industry average of 0.94% at the endof Q1 2007. Healthcare sales increased by 10% to £11m on an annual premium equivalent (APE)basis (2006: £10m). We expect sales of SME business to grow in the second halfof the year following the launch in July of our new SME proposition. Europe Our European business experienced a strong first half with sales increasing to£513m (2006: £340m), a 54% increase in constant currency. In Germany we are evolving our product offering to match the significant changesthat have taken place in the market during recent years. One such example isour new unit-linked product, Maxxellence, which was launched in October 2006.Its success, coupled with initiatives to access new distribution channels andbroaden existing broker arrangements, has helped us increase sales by 27% inconstant currency to £260m (2006: £209m). Sales in Ireland increased by 96% in constant currency to £253m (2006: £131m).This reflects the continued success of new products and the introduction ofself-investment options for customers, inspired by the UK SIPP platform. Thepositive impact of these developments has been underpinned by strong investmentperformance. Canada Sales in our Canadian business were down 37% in constant currency to £589m(2006: £1,025m). This reflects a number of large transactions which boostedsales volumes in the prior year, the continuation of our focus on margin overvolume in the first half, and a planned realignment of our distributioncapability. Group Savings and Retirement sales declined by 46% in constant currency to £339m(2006: £693m). The comparative period includes two large transactions whichaccounted for £319m. The second half of 2007 will be influenced by the resultsof current proposals to a number of large institutional clients. Individual Insurance, Savings and Retirement sales declined by 28% in constantcurrency to £172m (2006: £264m). This fall reflects the transition of lifefocused distributors towards wealth management business, and the realignment ofsales staff following the initiation of our repositioning strategy at the end of2005. In addition, the comparative period included £17m of unprofitableUniversal Life sales which the company no longer writes. We intend to re-launchour individual retail proposition. Group Insurance sales increased by 26% in constant currency to £78m (2006: £68m)against the backdrop of a competitive market. This growth reflects our successin Life and Health insurance and the positive impact of our repositioningstrategy. Excluding the business no longer written and the unusually large transactions inthe prior year period, underlying sales volumes declined by 7% on a constantcurrency basis. Asia Pacific Combined sales from our joint ventures in India and China and our Hong Kongoperations have increased by 107% in constant currency. Standard Life's shareof these sales was £125m (2006: £68m)7. Sales from our Indian joint venture HDFC Standard Life Insurance Limitedincreased by 104% in constant currency. The number of financial consultantsappointed by the joint venture has increased to 84,500 (30 June 2006: 34,000). Sales generated by our Chinese joint venture, Heng An Standard Life, increasedby 83% in constant currency, due to expansion in major cities within existingprovinces. This strong growth has resulted in Heng An Standard Life moving intoa top 10 position among the foreign joint venture peer group in China. Weexpect to start writing business in Liaoning province later this year. Standard Life Investments Standard Life Investments continues to perform exceptionally well with worldwideinvestment net inflows increasing by 61% to a record level of £5,021m (2006:£3,120m). Standard Life Investments UK net inflows increased by 54% to £4,302m (2006:£2,799m) thanks to strong institutional and retail business. Segregated fundinflows increased by 60% to £1,561m (2006: £977m) and retail mutual fund inflowsincreased by 63% to £1,113m (2006: £684m). Inflows into the Triple A moneymarket fund increased by 53% to £1,399m (2006: £915m), reversing the declinereported at the end of the first quarter. We experienced a strengthening of net inflows in respect of our Canadian andInternational operations to £392m (2006: £90m) and £372m (2006: £231m), thetrend in Canada reflecting a number of liability driven investment mandates wonduring the period. During the first half of 2007, total funds under management increased by £8.5bnto £140.6bn (31 December 2006: £132.1bn). The majority of this increase camefrom third party funds under management which increased by £7.6bn to £46.1bn (31December 2006: £38.5bn). Performance remained strong during the six month period, with 18 of our 23pooled pension funds above median and 6 of these in the top decile. Thestrength of performance across our range of mutual funds was recognised whenStandard life Investments was named 'Global Group of the Year' at the recentInvestment Week Awards 2007. For further information please contact: Media: Scott White 0131 245 5422 / 07712 485 738Barry Cameron 0131 245 6165 / 07712 486 463Neil Bennett (Maitland) 020 7395 0452 / 07900 000777Angus Maitland (Maitland) 020 7379 5151 Equity Investors: Gordon Aitken 0131 245 6799Duncan Heath 0131 245 4742 Debt Investors: Andy Townsend 0131 245 7260 Notes to Editors 1. Present Value of New Business Premiums (PVNBP) is calculated as 100% of single premiums plus the expected present value of new regular premiums. 2. Insurance new business and gross sales for overseas operations are calculated using average exchange rates. The principal average exchange rates for the first half of 2007 were £1: C$2.23 (2006: £1: C$2.03) and £1: €1.48 (2006: £1: €1.45). Funds under management are calculated using the closing exchange rate as at 30 June 2007. The principal closing exchange rates used as at 30 June 2007 were £1: C$2.13 (31 December 2006: £1 : C$2.28) and £1: €1.49 (31 December 2006: £1 : €1.48). 3. Analysis of Individual SIPP funds under management 30 June 2007 31 March 2007 31 December 2006 £m £m £m Insured Standard Life Funds 2,533 2,265 1,923Insured External Funds 1,445 1,180 921Collectives - Standard Life Investments 632 494 361Collectives - Funds Network 463 355 234Cash 334 262 223Non Cash and Non Collectives 920 729 599Total 6,327 5,285 4,261 Insured 3,978 3,445 2,844Non-insured 2,349 1,840 1,417Total 6,327 5,285 4,261 Of the £6.3bn of SIPP funds under management at 30 June 2007, some £0.2bn relateto funds on the Wrap platform. 4. The rewrite of the large Group Pensions case as a Group SIPP generated £140m of PVNBP in the second quarter. 5. Investments (TIP & PPIP) sales in the first half of 2007 comprised Institutional sales of £982m (2006: £700m) and Retail sales of £56m (2006: £67m). 6. Net flows for UK life and pensions products H1 2007 H2 2006 H1 2006Pension Products £bn £bn £bnInsured PensionsPremiums / Deposits 4.8 5.3 3.5Claims (3.6) (3.5) (1.8)Annuity Payments (0.4) (0.5) (0.3)Insured Pension Net Flows 0.8 1.3 1.4 Non - Insured PensionsPremiums / Deposits 0.8 0.6 0.4Claims (0.1) (0.1) -Non-Insured Pension Net Flows 0.7 0.5 0.4 Total Pension Net Flows 1.5 1.8 1.8 Life ProductsPremiums / Deposits 1.5 1.4 1.3Claims (1.8) (2.0) (1.1)Total Life Net Flows (0.3) (0.6) 0.2 UK L&P Net FlowsTotal UK L&P Insured-Product Flows 0.5 0.7 1.6Total UK L&P Non-Insured Product Flows 0.7 0.5 0.4Total UK L&P Net Flows 1.2 1.2 2.0 The figures reflected in the table above include the following amounts in respect of Institutional TIP: H1 2007 H2 2006 H1 2006 £bn £bn £bnPremiums / Deposits 1.0 1.6 0.8Claims (0.6) (0.4) (0.3)Net Flows 0.4 1.2 0.5 7. The growth percentages quoted for India, Asia Pacific life and pensions and Total worldwide life and pensions reflect the growth in sales in HDFC Standard Life Insurance Limited, rather than the growth in Standard Life's share of the joint venture. The sales quoted reflect Standard Life's share of the joint venture. 8. H1 2006 sales figures relate to the period before the demutualisation of the Standard Life Assurance Company on 10 July 2006. 9. Department of Work and Pensions rebate premiums in the first half of 2007 were £165m (2006: £65m), comprising Individual Pensions rebates of £93m (2006: £37m) and Group Pensions rebates of £72m (2006: £28m). 10. There will be a conference call today for newswires and online publications at 8.00am hosted by David Nish, Group Finance Director, Trevor Matthews, Chief Executive of Standard Life UK Financial Services and Keith Skeoch, Chief Executive of Standard Life Investments. Dial in telephone number +44 (0)20 7162 0125. Callers should quote Standard Life H1 Sales. 11. There will be a conference call today for investors and analysts at 9.30am hosted by David Nish, Group Finance Director, Trevor Matthews, Chief Executive of Standard Life UK Financial Services and Keith Skeoch, Chief Executive of Standard Life Investments. Dial in telephone number +44 (0)20 7162 0025. Callers should quote Standard Life H1 Sales. A recording of this call will be available for replay for one week by dialing +44 (0)20 7031 4064 (access code 759198). Standard Life New Business Summary6 month period ended 30 June 2007 Insurance Operations PVNBP APE 6 months to 6 months to % Change (f) 6 months to 6 months to % Change (f) 30 June 2007 30 June 2006 30 June 2007 30 June 2006UK £m £m £m £mPensions (a) 5,561 3,721 49% 737 534 38%Life 1,123 889 26% 112 90 24%Annuities 257 168 53% 26 16 63%Protection 13 24 -46% 2 4 -50%UK life and pensions 6,954 4,802 45% 877 644 36% EuropeIreland 253 131 93% 32 18 78%Germany 260 209 24% 24 21 14%Europe life and pensions 513 340 51% 56 39 44% CanadaGroup Savings and 339 693 -51% 29 61 -52%RetirementIndividual Insurance, 172 264 -35% 17 29 -41%Savings and RetirementGroup Insurance 78 68 15% 10 9 11%Canada life and pensions 589 1,025 -43% 56 99 -43% Asia PacificIndia (c) 102 57 95% (b) 17 12 56% (b)China (c) 19 11 73% 2 1 100%Hong Kong 4 - - 1 - -Asia Pacific life and 125 68 97% (b) 20 13 57% (b)pensions Total worldwide life and 8,181 6,235 31% (b) 1,009 795 27% (b)pensions Investment Operations Gross Inflows Net Inflows 6 months to 6 months to 6 months to 6 months to 30 June 2007 30 June 2006 30 June 2007 30 June 2006 £m £m £m £mUK (d) 4,902 3,142 4,302 2,799Canada 528 230 392 90International (e) 358 421 327 231Total worldwide investment 5,788 3,793 5,021 3,120 Banking Operations 6 months to 6 months to % Change (f) 30 June 2007 30 June 2006 £m £mGross mortgage lending 1,571 1,216 29% SL Healthcare 6 months to 6 months to % Change (f) 30 June 2007 30 June 2006 £m £mAPE 11 10 10% (a) UK Pensions figures include non-insurance element of SIPP product (6 monthsended 30 June 2007 PVNBP £958m, APE £101m and 6 months ended 30 June 2006 PVNBP£472m, APE £50m). (b) The percentage change figures for India are computed based on the percentagemovement in the new business of HDFC Standard Life Insurance Limited as a wholeto avoid distortion due to changes in the Group's shareholding in the jointventure during 2006 and 2007. (c) Amounts shown reflect Standard Life's share of the Joint Venture Company'sNew Business except as noted in (b) above. (d) The Triple A fund within UK Investment sales is calculated using average netclient balances. (e) International gross inflows include India where, due to the nature of theIndian investment sales market, the new business is shown as the net of salesless redemptions. (f) % change is calculated on the figures rounded to millions. For the full Press Release including detailed financial tables, please clickhere. http://www.rns-pdf.londonstockexchange.com/rns/6248b_-2007-8-6.pdf This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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