30th Jan 2008 07:01
Standard Life plc30 January 2008 Standard Life plcNew Business Results - twelve months to 31 December 200730 January 2008 • Worldwide life and pensions sales1 up 12% to £16,312m (2006: £14,599m2). • UK life and pensions sales up 15% to a record level of £13,174m (2006: £11,436m2). - Individual SIPP* sales up 24% to £4,538m (2006: £3,651m). - Group Pensions sales up 29% to £2,574m (2006: £1,989m). - Wrap funds under administration exceed £1bn (2006: £0.2bn). • Standard Life Investments worldwide investment net inflows up 39% to £6,361m (2006: £4,578m). - Third party funds under management up 24% to £47.7bn (31 December 2006: £38.5bn), driven by third party net inflows of £7.9bn (2006: £6.4bn). - Total funds under management up 9% to £143.4bn (31 December 2006: £132.1bn). • We expect to achieve all our financial and efficiency targets for 2007. Unless otherwise stated, all comparisons are in sterling3, all sales figures areon a PVNBP basis and all comparators are with the twelve months of 2006. *Individual SIPP includes Insured SIPP & Drawdown and Non-Insured SIPP. Group Chief Executive Sandy Crombie said: "The group's performance in 2007 was good, consolidating the strong progressmade in previous years. We grew worldwide life and pensions sales by 12%, andStandard Life Investments continues to deliver strong growth, despitechallenging market conditions in the second half of the year. At ourPreliminary results on 12 March 2008, we expect to report the achievement of allour financial and efficiency targets for 2007. "The early indications are that some of the markets in which we operate willremain difficult in 2008. We have however made a good start to 2008 and expectto improve our overall performance in the coming year. Our confidence is basedon our excellence in managing assets, industry-leading customer service, strongdistribution relationships and the ongoing initiatives to improve efficiency." Standard Life group The group's new business performance during 2007 has been good, despitedifficult market conditions in the second half of the year, with growth of 12%in worldwide life and pensions and a 39% increase in investment net inflows.The moderation in the growth rate from that seen in the first half of 2007 wasdue to lower levels of UK new business, reflecting the impact of seasonality,uncertainties in the tax regime affecting bond products and volatility infinancial markets. In addition, we secured an unusually large bulk TIP mandatein the final quarter of 2006. Excluding the bulk TIP mandate, worldwide lifeand pensions sales increased by 19% to £16,312m (2006: £13,759m2) for the fullyear. Net flows were healthy during 2007 with net investment inflows of £6.4bn (2006:£4.6bn) and net inflows in our UK life and pensions operations of £2.5bn (2006:£3.2bn). UK Financial Services The new business performance of our UK financial services division reflectsstrong growth in the first half of the year, followed by resilient performance,in the face of difficult market conditions, in the second half. Life and pensions new business volumes increased by 15% to a record level of£13,174m (2006: £11,436m2), driven by 11% growth in pensions and a 38% increasein savings and investment sales. Gross mortgage lending and healthcare salesincreased by 22% and 10% respectively. SIPP funds under administration have increased to £7.7bn4 at the year-end (31December 2006: £4.3bn). At 31 December 2007 we had 46,900 SIPP customers (31December 2006: 25,200) with an average case size of £164,000. Individual SIPP sales increased by 24% to £4,538m (2006: £3,651m). Second halfSIPP sales were lower than the first half, largely reflecting expected seasonaltrends as well as the difficult market conditions highlighted in our Q3 salesrelease. Whilst market conditions remain challenging, we are encouraged by SIPPsales achieved in 2008 to date, which are higher than the strong prior yearcomparative. We remain confident in the prospects for the UK SIPP market. We expect thefundamental attractions of SIPP, namely customer control, choice andflexibility, to underpin growth. We continue to innovate our SIPP proposition,with developments such as a high-yielding cash account and the introduction ofon-line servicing during the first quarter. Further enhancements to our SIPPoffering scheduled for 2008 include the launch of a GARS (Global Absolute ReturnStrategy) fund link, accepting protected rights and the launch of a variableannuity offering for the post-retirement market. We believe our competitiveadvantages of our people, processes and platform, coupled with our ongoingprogramme of proposition enhancements, leave us well positioned to capitalise onthe expected growth in this market. At 31 December 2007, funds under administration on Standard Life's Wrap platformhad increased to £1.1bn4 (31 December 2006: £0.2bn). At the end of the yearthere were 209 IFA firms using the platform (31 December 2006: 88 firms) and8,100 customers (31 December 2006: 900 customers) with an average fund size of£133,000. In 2008 we plan to continue this strong growth in our IFA user base. Individual Pension sales decreased by 18% to £782m (2006: £951m). This reflectsheightened activity in 2006 post A-day and our decision not to pay commission onnew business, which leads to sales being generated mainly from increments toexisting policies. Group Pensions sales increased by 29% to £2,574m (2006: £1,989m), reflecting thestrong levels of new and incremental business during the fourth quarter and thelarge group stakeholder scheme rewritten as a Group SIPP in the second quarter(£140m). Group SIPP accounted for 27% of total Group Pensions sales during theyear (2006: 14%). At 31 December 2007 UK Group Pension funds under managementhad increased to £15.0bn (31 December 2006: £13.5bn). At the end of 2007 we hada strong pipeline of new business, with a large scheme expected to transitionduring the first quarter. Trustee Investment Plan (TIP) and Personal Pension Investment Plan (PPIP) newbusiness decreased by 14% to £2,089m5 (2006: £2,428m). However, this movementreflects the £840m bulk TIP mandate from Citigroup which was secured in thefourth quarter of 2006, and which accounted for 23% of total UK life andpensions sales in that quarter. Excluding this transaction TIP and PPIP newbusiness increased by 32% for the full year. Savings and investments sales increased by 38% to £2,672m (2006: £1,937m).Sales of Offshore Bonds, at £284m, were over seven times the level of the prioryear (2006: £39m), and benefited from the launch of our retail portfolio bondand our distribution agreement with Fidelity. Investment Bond sales fellmarginally to £1,824m (2006: £1,862m). This was despite the slowdown in theonshore market in the second half of the year, which was driven by weakness inglobal financial markets and uncertainty regarding proposed capital gains taxchanges. We await clarity on the capital gains tax proposal - any sales impactwill be monitored and appropriate action taken where necessary. Sales of Mutual Funds via our Wrap and FundZone platforms increasedsignificantly during the year to £564m (2006: £36m) with strong growth rates inthe first three quarters partially offset by market-driven lower sales levels inthe final quarter. Annuity sales increased by 13% to £494m (2006: £438m). 94% of annuity salescame from customers with maturing Standard Life pensions (2006: 93%). 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 non-traditional IFAchannels (consulting actuaries, employee benefit consultants and banks) andother new channels (including multi-tie and single-tie arrangements) represented41% of new business (2006: 34%). Net flows for life and pensions business were £2.5bn during 2007 (2006: £3.2bn)6. Within this total, net pensions flows were £2.7bn (2006: £3.6bn). Excludingvolatile institutional TIP flows, underlying net pensions flows were £1.7bn(2006: £1.9bn). Net outflows for our savings and investments portfolio were£0.2bn during the period (2006: net outflow of £0.4bn). Claims activity acrossour life and pensions portfolios remains above long-term assumed levels, despitean improvement in recent weeks. In line with normal industry practice, we willreview our operating assumptions as part of the year end process. Gross mortgage lending increased by 22% to £3,652m (2006: £2,995m) with salesvolumes resilient to difficult market conditions throughout the year. At theend of the year mortgages under management stood at £11.3bn (31 December 2006:£10.4bn). Our mortgage portfolio remains of the highest quality with an arrearsrate of 0.18% at 31 December 2007, compared with an industry average of 1.15% atthe end of the third quarter. Healthcare sales rose by 10% to £22m (2006: £20m) on an annual premiumequivalent (APE) basis. Following the launch of our SME product we expectfurther progress in this market over the coming months. Europe Life and pensions sales in Europe increased by 35% in constant currency to£1,179m (2006: £866m). Sales in Ireland increased by 38% in constant currency to £457m (2006: £330m)reflecting the continued popularity of our new products, self investment optionsinspired by the UK SIPP platform, and our improved standing amongst financialadvisers. We have increased the proportion of single premium sales, which havegreater profitability and lower capital strain. In Germany sales were up by 34% on a constant currency basis to £722m (2006:£536m) due to the success of our new unit-linked product, Maxxellence andinitiatives to strengthen distribution. Canada New business in our Canadian operations fell by 19% in constant currency to£1,657m (2006: £2,091m2). Excluding exceptionally large transactions,underlying sales volumes fell by 8%. This underlying trend reflects our focuson margin over volume as well as the planned realignment of our distributioncapability, which reduced sales levels earlier this year. Sales in Canadaincreased during the fourth quarter relative to the third quarter, principallyreflecting a large Group Savings and Retirement mandate, which transitionedduring the period. Group Savings and Retirement sales decreased by 27% in constant currency to£841m (2006: £1,188m). Fourth quarter sales volumes benefited from a £196mmandate from Bombardier Recreational Products (BRP). Competition within themarket remains aggressive and quote activity across all segments has reduced. Individual Insurance, Savings & Retirement sales were down 20% in constantcurrency to £357m (2006: £460m) reflecting the continuing realignment of oursales operations and the inclusion in the prior year of unprofitable UniversalLife sales, which the company no longer writes. Group Insurance sales were up 26% in constant currency to £175m (2006: £143m).Sales volumes for 2007 increased in the fourth quarter, reflecting our successin the disability insurance segment following our strategic repositioning inthat market. Asia Pacific Combined sales from our joint ventures in India and China and our Hong Kongoperations have increased in constant currency by 67%7 on a PVNBP basis and by91% on an APE basis. Standard Life's share of these sales was £302m (2006:£206m) on a PVNBP basis. Sales from our Indian joint venture HDFC Standard Life Insurance Limitedincreased in constant currency by 43% on a PVNBP basis and by 75% on an APEbasis. The number of financial consultants appointed by the joint venture hasincreased to approximately 132,000, an increase of 33,000 during the fourthquarter. At year end, we increased our stake in the joint venture to 26%,which is the maximum permitted by the Indian Regulator. The joint venture hasalso announced its intention to IPO part of the business by the end of 2009. Sales generated by our Chinese joint venture, Heng An Standard Life increased inconstant currency by 121% on a PVNBP basis and by 118% on an APE basis,reflecting our continued expansion in major cities. During the fourth quarterHeng An Standard Life moved into a top 10 position by market share amongst theSino-foreign JV group in China. Our joint venture was also the first lifeinsurance company in China to launch a group pension plan product that attractstax relief. Standard Life Investments Standard Life Investments has continued to attract strong levels of new businessthroughout the year, despite the challenging market faced in the second half.Worldwide investment net inflows for the year increased by 39% to £6,361m (2006:£4,578m). Strong sales of institutional and retail business led to UK net inflowsincreasing by 34% to £5,439m (2006: £4,050m). Retail mutual fund inflowsincreased by 13% to £1,460m (2006: £1,287m) despite a slowdown in gross inflowsduring the second half, which can be directly linked to the recent volatility inglobal financial markets. Inflows into Private Equity funds increased by 31% to£464m (2006: £354m), due to the large mandate of €400m (£279m) from CalPers8which transitioned during the third quarter. Segregated fund inflows increasedby 64% to £2,322m (2006: £1,417m) partly due to two large bond mandates in thethird quarter. Over the year we experienced a strengthening of net inflows in respect of ourCanadian and International operations to £400m (2006: £104m) and £522m (2006:£424m) respectively. Third party assets under management have increased by 24% to £47.7bn (31December 2006: £38.5bn) driven by strong third party net inflows of £7.9bn(2006: £6.4bn), which accounted for 87% of this increase. Total assets undermanagement increased by 9% to £143.4bn at 31 December 2007 (31 December 2006:£132.1bn). Investment performance has been steady with 13 of the 23 pooled pension fundsoutperforming their respective peer groups during the twelve months to 31December 2007. The majority of our 24 OEICs and Unit Trusts continued tooutperform their peer group with seven funds achieving top quartile performancewith the European Equity Growth Fund returning top decile performance.Management of the range was also recognised with 18 of the 24 actively managedfunds rated 'A' or above by Standard & Poor's. Standard Life group outlook At our 2007 Preliminary results we expect to report the achievement of all ourfinancial and efficiency targets for the year, along with increased cash flow,driven by growth in sales and the continued delivery of operationalimprovements. Volatile investment markets, the downturn in the commercial property sector, anduncertainties in the tax regime affecting bond products are expected to continueto have an impact on the UK market during the first quarter. However we expect to maintain our market leading position, due to our ongoingdevelopment of propositions that are attractive in the current marketenvironment and the resilience of our distribution channels. Early indicationsfrom January 2008 support this expectation, with UK life and pensions salesachieved to date higher than the strong prior year comparative. In recent weeks, we launched Standard Life Wealth, a new discretionaryinvestment management business which further broadens our offering in the UKfinancial services market. Standard Life Wealth will target individuals,charities and small or executive pension schemes with at least £2m of investableassets. Internationally, the prospects for 2008 are encouraging. In Europe marketconditions continue to be difficult but while we expect the rate of growth willslow compared to that seen in 2007, we anticipate 2008 will be ahead of lastyear. In Canada the ongoing rebuilding of our retail sales force and alreadysecured sales will provide a more positive start to 2008 than the prior year.In Asia Pacific we expect further strong growth in our operations driven by newproduct launches, wider distribution and market expansion. We expect to seecontinued strong growth in the Indian market due to an increase in householdincomes, favourable demographics and increased penetration of rural markets. InChina we expect continued product innovation as our joint venture utilises itsgeographical advantage of being based in the Tianjin Binhai New Area InsurancePilot Zone. The outlook for Standard Life Investments remains positive, despite volatilemarkets and the industry wide slow down in mutual fund sales experienced duringthe fourth quarter of 2007. Strong third party inflows, driven by institutionalfunds, are expected to sustain continued growth in third party assets undermanagement. We look forward to 2008 with confidence. For further information please contact: Institutional Equity Investors: Gordon Aitken 0131 245 6799Duncan Heath 0131 245 4742 Retail Equity Investors: Computershare 0845 113 0045 Media: Barry Cameron 0131 245 6165 / 07712 486 463Neil Bennett (Maitland) 020 7379 5151 / 07900 000 777 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. The 2007 PVNBP figures are shown prior to any year end changes to non-economic assumptions. The impact on PVNBP of any such assumption changes will be reported in the 2007 preliminary results on 12 March 2008. For our Asia Pacific operations we have quoted growth rates on both PVNBP and APE bases, due to the young and rapidly growing nature of these businesses. 2. We are reporting sales of Mutual Funds within our UK and Canadian life and pensions operations for the first time and have restated 2006 figures accordingly. Mutual Funds sales in the UK are defined as those sold to customers on the Wrap and FundZone platforms and do not include Mutual Funds sold by Standard Life Investments. 3. Insurance new business and gross sales for overseas operations are calculated using average exchange rates. The principal average exchange rates for the twelve months to 31 December 2007 were £1: C$2.15 (2006: £1: C$2.09) and £1: €1.46 (2006: £1: €1.47). Funds under management are calculated using the closing exchange rate as at 31 December 2007. The principal closing exchange rates used as at 31 December 2007 were £1: C$1.96 (31 December 2006: £1: C$2.28) and £1: €1.36 (31 December 2006: £1: €1.48). 4. Analysis of Individual SIPP funds under administration. 31 Dec 31 Dec 2007 2006 £m £m Insured Standard Life Funds 2,752 1,923Insured External Funds 1,671 921Collectives - Standard Life Investments 834 361Collectives - Funds Network 603 234Cash 484 223Non Cash and Non Collectives 1,332 599Total 7,676 4,261 Insured 4,423 2,844Non-insured 3,253 1,417Total 7,676 4,261 Of the £7.7bn of SIPP funds under administration at 31 December 2007, £0.4bnrelate to funds on the Wrap platform. 5. Investments (TIP & PPIP) sales comprised Institutional sales of £2,015m (2006: £2,310m) and Retail sales of £74m (2006: £118m). 6. Net flows for UK life and pensions products 12 months 12 months Q4 2007 Q4 2007 2006 2006Pensions £bn £bn £bn £bnInsured PensionsPremiums / Deposits 9.0 8.8 2.0 2.9Claims (6.8) (5.3) (1.5) (1.9)Annuity Payments (0.9) (0.8) (0.2) (0.2)Insured Pension Net Flows 1.3 2.7 0.3 0.8 Non - Insured PensionsPremiums / Deposits 1.6 1.0 0.4 0.3Claims (0.2) (0.1) (0.1) (0.0)Non-Insured Pension Net Flows 1.4 0.9 0.3 0.3 Total Pension Net Flows 2.7 3.6 0.6 1.1 Savings and InvestmentsLife ProductsPremiums / Deposits 2.6 2.7 0.5 0.7Claims (3.6) (3.1) (0.9) (0.9)Life Net Flows (1.0) (0.4) (0.4) (0.2) Offshore BondsPremiums / Deposits 0.3 0.0 0.1 0.0Claims (0.0) (0.0) (0.0) (0.0)Offshore Bonds Net Flows 0.3 0.0 0.1 0.0 Mutual FundsPremiums / Deposits 0.5 0.0 0.1 0.0Claims (0.0) (0.0) (0.0) (0.0)Mutual Fund Net Flows 0.5 0.0 0.1 0.0 Total Savings and Investments Net Flows (0.2) (0.4) (0.2) (0.2) UK L&P Net FlowsTotal UK L&P Insured-Product Flows 1.1 2.3 0.1 0.6Total UK L&P Non-Insured Product Flows 1.4 0.9 0.3 0.3Total UK L&P Net Flows 2.5 3.2 0.4 0.9 The figures reflected in the table above include the following amounts in respect of Institutional TIP: 12 months 12 months Q4 2007 Q4 2007 2006 2006 £bn £bn £bn £bn Premiums / Deposits 2.1 2.4 0.6 1.2Claims (1.1) (0.7) (0.3) (0.2)Net Flows 1.0 1.7 0.3 1.0 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. California Public Employees Retirement System (CalPers). 9. 2006 sales figures span the demutualisation of The Standard Life Assurance Company on 10 July 2006. 10. Department of Work and Pensions rebate premiums were £252m (2006: £289m), comprising Individual Pensions rebates of £145m (2006: £172m) and Group Pensions rebates of £107m (2006: £117m). 11. There will be a conference call today for newswires and online publications at 8.00am hosted by Sandy Crombie, Group Chief Executive, David Nish, Group Finance Director, and Keith Skeoch, Chief Executive of Standard Life Investments. Dial in telephone number +44 (0)20 7162 0025. Callers should quote Standard Life Media Call. 12. There will be a conference call today for investors and analysts at 9.30am hosted by Sandy Crombie, Group Chief Executive, David Nish, Group Finance Director, and Keith Skeoch, Chief Executive of Standard Life Investments. Dial in telephone number +44 (0)20 7162 0125. Callers should quote Standard Life Sales. A recording of this call will be available for replay for one week by dialing +44 (0)20 7031 4064 (access code 780224). Standard Life New Business Summary12 month period ended 31 December 2007 Insurance Operations PVNBP APE 12 months to 12 months to % Change 12 months to 12 months to % Change 31 December 31 December (g) 31 December 31 December (g) 2007 2006 2007 2006UK £m £m £m £mPensions (a) 9,983 9,019 11% 1,335 1,201 11%Savings and Investments (including "Life") (b) 2,672 1,937 38% 275 195 41%Annuities 494 438 13% 49 44 13%Protection 25 42 (40%) 4 6 (33%)UK life and pensions 13,174 11,436 15% 1,663 1,446 15% EuropeIreland 457 330 38% 56 46 22%Germany 722 536 35% 69 51 35%Europe life and pensions 1,179 866 36% 125 97 29% CanadaGroup Savings and Retirement 841 1,188 (29%) 70 98 (29%)Individual Insurance, Savings and Retirement 357 460 (22%) 36 49 (27%)Group Insurance 175 143 22% 23 19 21%Mutual Funds 284 300 (5%) 28 30 (7%)Canada life and pensions 1,657 2,091 (21%) 157 196 (20%) Asia PacificIndia (d) 223 180 45% (c) 38 25 76% (c)China (d) 55 26 112% 8 4 100%Hong Kong 24 - - 3 - -Asia Pacific life and pensions 302 206 67% (c) 49 29 96% (c) Total worldwide life and pensions 16,312 14,599 12% (c) 1,994 1,768 13% (c) Investment Operations Gross Inflows Net Inflows 12 months to 12 months to 12 months to 12 months to 31 December 31 December 31 December 31 December 2007 2006 2007 2006 £m £m £m £mUK (e) 7,025 4,773 5,439 4,050Canada 720 369 400 104International (f) 647 615 522 424Total worldwide investment 8,392 5,757 6,361 4,578 Banking Operations 12 months to 12 months to % Change 31 December 31 December (g) 2007 2006 £m £m Gross mortgage lending 3,652 2,995 22% SL Healthcare 12 months to 12 months to % Change 31 December 31 December (g) 2007 2006 £m £m APE 22 20 10% (a) UK Pensions figures include non-insurance element of SIPP product (12 monthsended 31 December 2007 PVNBP £1,823m, APE £194m and 12 months ended 31 December2006 PVNBP £1,218m, APE £129m). (b) UK Savings and Investments figure includes certain Mutual Funds as describedin Note 2 (12 months ended 31 December 2007 PVNBP £564m, APE £64m and 12 monthsended 31 December 2006 PVNBP £36m, APE £4m). (c) 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. (d) Amounts shown reflect Standard Life's share of the Joint Venture Company'sNew Business except as noted in (c) above. (e) The Triple A fund within UK Investment sales is calculated using average netclient balances. (f) 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. (g) % 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/8254m_-2008-1-29.pdf This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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