Standard Life windfall news

MiserlyMartin

Well I think I'm going to vote against flotation. They spend millions convincing us to stay mutual in 2000, then Lumsden and co run the company into the ground and expect us to bail them out. All these windfall payments don't come from thin air and somebody convince me that my pension will do better under the plc. It did alright last year. If things are so tough and they are struggling so much for capital then why did they make a profit last year? I don't believe the marketing hype they state in the case for demutualisation.

Supporters of demututalisation seem to have forgotten that the society's troubles partly result from the problems of the stock market over the past few years. To float, and make people's pensions and assurances a plaything of the markets, could only worsen matters. Every penny paid to an outside shareholder in dividends is a penny less paid to policyholders.

As a mutual Standard Life consistantly outperformed plc's by 9% on overall returns for with profits life and pension policies, over a 15 year period from 1985-2000. The cost of converting to PLC is also wasteful.

As a PLC the company would pay more tax. Yes its nice to get a windfall but we must look to the future and it would not be desireable to have our pensions diminished by having to pay shareholders.

nickmack

I'm inclined to agree MiserlyMartin.

Most people don't look past the windfalls they get. You're right about Lumsden et al not managing the company well.

If demutalisation is the best way forward for the company (and I'm not saying it necessarily is - even now) it could have been pushed harder a few years ago and been valued much higher than it is currently.

Usually demutalisation is a sign of desperation and a last resort after a large !!!! up by the management. Sometimes it works, sometimes it doesn't.

dunstonh

As a mutual Standard Life consistantly outperformed plc's by 9% on overall returns for with profits life and pension policies, over a 15 year period from 1985-2000. The cost of converting to PLC is also wasteful.

As a PLC the company would pay more tax. Yes its nice to get a windfall but we must look to the future and it would not be desireable to have our pensions diminished by having to pay shareholders.

That works in the area of implicit charged contracts, such as with profits. However, in these days of explicit charged contracts it doesnt tend to hold true any more.

A number of the PLCs offer lower charges in pensions and investments and some of the PLCs are active in buying market share and offering terms that Standard Life cannot compete with.

The irony perhaps is that as a PLC, Standard Life will have to buy market share to keep shareholders happy and this should result in better terms being offered on a range of contracts.

ReportInvestor

MiserlyMartin wrote:

Well I think I'm going to vote against flotation.

I don't know where to begin.

They spend millions convincing us to stay mutual in 2000, then Lumsden and co run the company into the ground

We agree 100% . But these are early days.

and expect us to bail them out.

We're bailing ourselves out.

All these windfall payments don't come from thin air and somebody convince me that my pension will do better under the plc.

Your existing fund is ringfenced from shareholders. The Scottish Court of Session will require it .

Demutualisation will add capital to the with profits fund so that Standard can invest more in shares, increasing the future performance prospects of our fund .

It did alright last year. If things are so tough and they are struggling so much for capital then why did they make a profit last year?

Are you aware, that you, as a WP policyholder at a mutual, are where the buck stopped for their £340m loss in 2004? Does "Equitable Life" mean anything to you?

I don't believe the marketing hype they state in the case for demutualisation.

It's not hype. The future lies away from with profits and the company has to invest in the future.

Supporters of demututalisation seem to have forgotten that the society's troubles partly result from the problems of the stock market over the past few years.

That's irrelevant. If £billions of our money has been lost, and it has , it still doesn't change anything for the future. We have start the journey from where we and our company are today.

To float, and make people's pensions and assurances [sic] a plaything of the markets, could only worsen matters.

That is a total misunderstanding. Without recapitalisation your WP fund will be more dependent on the [underperforming and possibly overvalued] bond markets which have limited prospects and possible downside risk.

Every penny paid to an outside shareholder in dividends is a penny less paid to policyholders.

See the point above about how policy values earned to date are ring-fenced.

As a mutual Standard Life consistantly outperformed plc's by 9% on overall returns for with profits life and pension policies, over a 15 year period from 1985-2000.

Irrelevant. In the past. This has no bearing on future performance as either a mutual or a Plc.

As a mutual in the future, Standard would underperform because of its low capitalisation. The high performing mutuals life Wesleyan perform well more because they are well capitalised than because they are mutual. High capitalisation allows for more shares to be held in the WP fund which was the secret of Standard's past outperformance.

The cost of converting to PLC is also wasteful.

You have a point there, assuming that the mutual business is an ongoing concern and delivering value to members. Which it isn't . But still, I can't imagine the Greens are going to support demutualisation given the 1,100 tons of documents heading for the waste bins (hopefully of the recycling type ).

As a PLC the company would pay more tax.

It would also be run more efficiently. As it has been in 2005 under Sandie Crombie. Aren't you livid that the past management was running the company at a loss - underwritten by you & me - while pocketing bonuses for expanding sales?

Yes its nice to get a windfall but we must look to the future and it would not be desireable to have our pensions diminished by having to pay shareholders.

That's not the case with contributions to date.

And on future contributions the improved capitalisation of the WP fund, dependent on demutualisation, could also improve the investment performance of our fund since more of the fund could be invested in equities.

Which was the real secret of Standard Life's good performance in the past. Much more than mutuality.

Standard used to be a phenomenally well capitalised company and this benefited the with profits fund investors

It is no longer well capitalised .

That's what this flotation is all about.

Don't misunderstand me. I am not for one moment excusing our execrable past chief executives Bell & Lumsden. I can well understand why some endowment mortgage holders might want to dance on their graves.

But we have to look to the future.

dazzatheman

Anyone would be loopy to not vote for demutualization.

Everything about investment involves an element of risk, so if it stays as it is there is risk about how your investments perform in the future, and if it changes there is a similar risk. There are no guarantees about anything, except to say Standard Life think they will fare better by voting YES.

I will oblige and vote YES, as i will vote for risk WITH some free cash/shares, instead of risk without it !! Simple, as no-one can guarantee me that any plan will do better by voting no.

Edna_Bucket_2

nickmack wrote:

I'm inclined to agree MiserlyMartin.

Reportinvestor has covered both your variety of points better than I could. The thing is that "that was then and this is now" and we can't re-fight the arguments of the past, which you seem to be doing.

The central theme for the here and now is that there is no Plan B. If you want there to be a company, you vote "Yes."

ReportInvestor

Edna_Bucket wrote:

there is no Plan B.

I agree.

But there is "default option C".

Members vote no.
The Chief Executive resigns ( as he has promised to do).
The Chairman is stepping down anyway in a few months.
Standard goes into meltdown, starved of capital and lacking direction.
UK's Aviva or USA's GE Capital or France's Axa pick up Standard on the cheap.

So Standard becomes a Plc, but is not independent & policyholders end up with a less friendly management.

And meanwhile they have got less bang for their buck in terms of a windfall .

ReportInvestor

ReportInvestor wrote:

France's Axa pick up Standard on the cheap.

Today's Times thinks that Standard has received approaches from both Resolution Life and Axa.

The Times Business editor is convinced that members must vote yes, and that flotation - not a pre-float merger - is the way to go.

The Times

"....demutualisation is likely to help than hinder the accrual of benefits for with profits policyholders...." And that's not counting the windfall!

All Wednesday's news and views - IA link

Happychappy

I shall certainly vote for it, although I shall only get a paltry 1135 shares which wont make up for the deficit between the lies of the Independent financial advisor and the actual amount I will have to stump up in order to pay for his ill-gotten gains. :mad:

I certainly wouldnt vote to allow the shower who run Standard life to continue to feather their own nest and pay each other handsomely for incompetence, as soon as I cash the shares in I shall pay off the mortgage and be gald my dealings with SL are over with.

ReportInvestor

Hi Hc,

You seem have had your documents earlier than most.

Sorry to hear about the disappointment with your IFA.

Coiuld you possibly let us know your type of policy, premium/invesment and commencement date so that we can get some idea of how they are working out the variable element of the windfall?