8th May 2007 07:02
Standard Life plc08 May 2007 Standard Life plcNew Business Results - three months to 31 March 20078 May 2007 • Worldwide life and pensions sales1 up 40% to £3,915m (2006: £2,802m). • UK life and pensions sales up 52% to £3,220m (2006: £2,119m). - Individual SIPP* sales up 117% to £1,233m (2006: £569m). - Group Pensions sales up 40% to £582m (2006: £415m). • Standard Life Investments third party funds under management up 10% to £42.4bn (31 December 2006: £38.5bn). - UK Segregated Fund net inflows up 195% to £772m (2006: £262m). - UK Mutual Fund retail net inflows up 76% to £587m (2006: £333m). All comparisons are in sterling unless otherwise stated2. All sales figures areon a PVNBP basis unless otherwise stated. All comparators are with the firstquarter 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: "I am delighted we have started 2007 so strongly following the excellent newbusiness performance throughout 2006. The strong momentum in life and pensionssales has continued in the first quarter of the year and our third party fundsunder management have increased by 10%. "Growth is being driven by strong sales of life and pensions business in the UKwith our strategy to focus on the accumulation of customers' assets. "With our innovative range of products, excellent investment track record andfirst class service, strong sales momentum is continuing into the second quarterand is supporting the delivery of the 2007 return on embedded value target. Wecontinue to capitalise on the considerable opportunities available to ourbusinesses." UK As previously announced we have established a UK division to drive the continuedgrowth of UK life and pensions, Standard Life Bank and Standard Life Healthcare.The division will realise synergies in both costs and revenues, by streamliningcommon functions, and will enhance our capability to grow. Life and pensions new business volumes increased 52% in the UK to £3,220m (2006:£2,119m) driven by 56% growth in pensions, 28% increase in life products, and astrong showing in annuities. Gross mortgage lending increased by 25% andhealthcare sales were consistent with the prior year. Individual SIPP sales increased strongly by 117% to £1,233m (2006: £569m),resulting in SIPP funds under management growing to £5.3bn3 (31 December 2006:£4.3bn). While competitors have launched SIPPs, our superior offering and firstmover advantage have enabled us to continue to lead this market in both volumeand service. Customers have been taking advantage of the more generous annualcontribution limits post A-day and increasing their utilisation of the SIPPfunctionality and investment flexibility with 35% of assets now invested innon-insured funds. With 30,800 accounts (31 December 2006: 25,200 accounts) wesee significant potential for the size of this market. Standard Life's Wrap proposition continues to be rolled out to and developedwith IFAs, and this process will continue. At the end of the first quarter therewere 115 IFA firms using the platform and 2,500 customers with an average fundsize of £140,000. At 31 March 2007, funds under management on the Wrap platformhad increased to £0.4bn3 (31 December 2006: £0.2bn). Group Pensions performed well, increasing sales by 40% to £582m (2006: £415m)due to higher increments from existing schemes and increasing volumes of GroupSIPP, which now accounts for 25% of Group Pensions sales. The strength inservice and award winning system functionality have contributed to StandardLife's success in winning a number of new blue-chip Group SIPP schemes on a nilcommission basis. TIP and PPIP new business increased by 53% to £533m4 (2006:£349m) driven principally by strong investment performance. Life sales increased by 28% to £558m (2006: £438m). Continued strong in-houseinvestment performance helped drive Investment Bond sales up 24% to £534m (2006:£430m); 77% of Investment Bond assets were invested in Standard Life funds (31December 2006: 77%). The success of our Offshore Bond, which was launched inJanuary 2006, is encouraging, with sales increasing by 206% to £24m (2006: £8m). Standard Life's annuity sales increased by 142% to £128m (2006: £53m) with 94%of sales being generated from maturing Standard Life pensions. In the UK life and pensions market we continue to strengthen our distribution bydiversifying into new channels while maintaining strong growth in the IFAsector. Non-IFA sales now represent 38% (2006: 21%) of new business. Net flows for life and pensions' products5 were £0.5bn in the first quarter of2007 in line with our expectations (2006 full year: £3.2bn - included a £840mbulk TIP mandate). Pensions' inflows were £0.7bn while there were outflows of£0.2bn in life products. Gross mortgage lending increased by 25% to £748m (2006: £596m) in a competitivemarket due to continued successful targeting of core affluent customers. At 31March 2007 mortgages under management were £10.4bn (31 December 2006: £10.4bn).Credit quality remains extremely high; the arrears rate of 0.19% continues to bea fraction of the industry average of 0.94% as at 31 March 2007. Healthcare sales of £5m are level year on year, with growth in Individualbusiness driven by sales in the senior market through the EspritHealth product.Sales are lower in SME and Corporate business as we continue to focus on writingprofitable new business in a price driven market. A new SME proposition will belaunched this quarter which we expect to reduce operating costs and increasesales. New propositions for Individual and Corporate business will follow laterthis year. Overall within the UK division we have been encouraged by the excellent startmade to 2007 and have witnessed a continuation of strong new business volumesthroughout April. Europe Life and pensions sales in Europe were strong, increasing by 53% in constantcurrency to £249m (2006: £167m). In Germany sales increased by 24% in constant currency to £121m (2006: £100m)due to the success of the Maxxellence and Suxxess products. This is consistentwith our strategy to move away from With-Profits products with high guaranteesto Unit Linked and comparatively low guarantee products. Strong sales growth has been experienced in Ireland, with new businessincreasing by 96% in constant currency to £128m (2006: £67m). The increasereflects the establishment of new products and continuing strong pension sales. Canada Sales in our Canadian business were down 15% in constant currency to £359m(2006: £479m). As highlighted in the 2006 Q1 new business announcement thecomparator included an exceptionally large Group Annuity contract of £61m andthe carry over of unprofitable Universal Life sales of £17m from 2005.Adjusting for these contracts, sales increased by 2% in constant currency andwithin Group Savings and Retirement, sales of our flagship pensions productsincreased 5% in constant currency. Overall sales results for the quarter reflect the focus on margin over volumeand the continuation of the challenging conditions experienced in 2006. Weexpect to make positive inroads in our chosen markets this year, with newbusiness prospects more encouraging now than three months ago. Asia Pacific Combined sales from our joint ventures in India and China and our Hong Kongoperations have increased by 184%6 in constant currency. Standard Life's shareof these sales was £87m (2006: £37m). This has been achieved by more thandoubling our licensed financial consultants in India to 74,000 (2006: 33,000),and our agents in China to 1,800 (2006: 600). We seek continued sales growth ineach of these markets driven by wider distribution, market growth and newproduct launches. Standard Life Investments Standard Life Investments delivered another excellent first quarter withworldwide net investment sales of £2,264m (2006: £2,257m). During the quartertotal funds under management increased by £4.9bn to £137.0bn. The majority ofthis increase came from third party funds under management which increased by£3.9bn to £42.4bn at 31 March 2007. Standard Life Investments UK net inflows reached £2,129m, up by 9% (2006:£1,953m) with an improving mix of business. This was driven by strong sales inboth institutional and retail business, with segregated fund inflows rising by195% to £772m (2006: £262m) including notable bond mandate wins and retailmutual fund inflows increasing 76% to £587m (2006: £333m). The increased salesin these two product lines more than offset the decline in Triple A money marketfund sales which decreased by 42% to £705m (2006: £1,206m). Performance remained strong with 18 out of 23 pooled pension funds beating themedian over the twelve months to 31 March 2007. During the first quarter of2007, 14 out of 23 pooled pension funds produced top quartile performance withseven of these funds top decile, and 14 out of 23 mutual funds produced topquartile performance with 20 of the 23 above median. Following the end of the quarter we continue to see a strong pipeline ofbusiness building on Standard Life Investments' impressive performance trackrecord and product developments in both the retail and institutional markets. Paste the following link into your web browser to download the PDF document related to this announcement: http://www.rns-pdf.londonstockexchange.com/rns/1868w_-2007-5-7.pdf Ends For further information please contact: Media: Scott White 0131 245 5422 / 07712 485 738Barry Cameron 0131 245 6165 / 07712 486 463Neil Bennett (Maitland) 0207 379 5151 / 07900 000 777 Equity Investors: Gordon Aitken 0131 245 6799Conor O'Neill 0131 245 6466 Debt Investors: John Cummins 0131 245 5195Georgina Marshall 0131 245 9798 Notes to Editors 1. Present Value of New Business Premiums (PVNBP) is calculated as 100% ofsingle premiums plus the expected present value of new regular premiums. 2. Insurance new business and Investment gross sales for overseasoperations are calculated using average exchange rates. The principal averageexchange rates for the first quarter 2007 were£1: C$2.29 (2006: £1: C$2.01) and £1: €1.49 (2006: £1: €1.46). Funds undermanagement are calculated using the closing exchange rate as at 31 March 2007.The principal closing exchange rates used as at 31 March 2007 were £1: C$2.26(31 December 2006: £1: C$2.28) and £1: €1.47 (31 December 2006: £1: €1.48). 3. Analysis of SIPP funds under management 31 March 31 December 2006 30 June 2006 31 December 2007 2005 £m £m £m £m Insured Standard Life Funds 2,265 1,923 1,215 762Insured External Funds 1,180 921 435 243Collectives - Standard Life Investments 494 361 226 116Collectives - Funds Network 355 234 70 15Cash 262 223 191 83Non Cash and Non Collectives 729 599 268 121Total 5,285 4,261 2,405 1,340 Insured 3,445 2,844 1,650 1,005Non-insured 1,840 1,417 755 335Total 5,285 4,261 2,405 1,340 Of the £5.3bn of SIPP funds under management at 31 March 2007, some £0.2bnrelate to funds on the Wrap platform. 4. Investments (TIP & PPIP) sales comprised Institutional sales of £509m(2006: £318m) and Retail sales of £24m (2006: £31m). 5. Net flows for UK life and pensions products Q1 2007 FY 2006Pension Products £bn £bnInsured PensionsPremiums / Deposits 2.3 8.8Claims (1.8) (5.3)Annuity Payments (0.2) (0.8)Insured Pension Net Flows 0.3 2.7 Non - Insured PensionsPremiums / Deposits 0.4 1.0Claims - (0.1)Non-Insured Pension Net Flows 0.4 0.9 Total Pension Net Flows 0.7 3.6 Life ProductsPremiums / Deposits 0.7 2.7Claims (0.9) (3.1)Total Life Net Flows (0.2) (0.4) UK L&P Net FlowsTotal UK L&P Insured-Product Flows 0.1 2.3Total UK L&P Non-Insured Product Flows 0.4 0.9Total UK L&P Net Flows 0.5 3.2 The figures reflected in the table above include the following amounts in respectof Institutional TIP: Q1 2007 FY 2006 £bn £bnPremiums / Deposits 0.5 2.4Claims (0.2) (0.7)Net Flows 0.3 1.7 6. The growth percentages quoted for India, Asia Pacific life and pensionsand Total worldwide life and pensions reflect the growth in sales in HDFCStandard Life Insurance Limited, rather than the growth in Standard Life's shareof the joint venture. The sales quoted reflect Standard Life's share of thejoint venture. 7. The full year 2006 sales figures span the demutualisation of TheStandard Life Assurance Company on 10 July 2006. 8. Department of Work and Pensions (DWP) rebate premiums were £18m (2006:£25m), comprising Individual Pensions rebates of £10m (2006: £14m) and GroupPensions rebates of £8m (2006: £11m). 9. There will be a conference call today for newswires at 8:00am hosted byDavid Nish, Group Finance Director, Trevor Matthews, Chief Executive of StandardLife Assurance Limited and Keith Skeoch, Chief Executive of Standard LifeInvestments Limited. Dial in telephone number: +44 (0)20 7162 0125. Callersshould quote Standard Life Sales. 10. There will be a conference call for investors and analysts at 9:00amhosted by David Nish, Group Finance Director, Trevor Matthews, Chief Executiveof Standard Life Assurance Limited and Keith Skeoch, Chief Executive of StandardLife Investments Limited. Dial in telephone number +44 (0)20 7162 0125. Callersshould quote Standard Life Sales. A recording of this call will be available forreplay for one week by dialling +44 (0)20 7031 4064, access code: 746594. 11. Standard Life will host an analyst and investor day on 31 May 2007 atStandard Life's Head Office in Edinburgh. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SLA.L