Standard Life Shares

ReportInvestor

Tempus in the Times - Standard worth holding, if only for a potential bid
[This was written before the results were announced.]

Yahoo
Evolution now has Standard Life on an "add" rating.
Previously it had been a "buy" with a 280p target price.

Telegraph - Standard on track for targets
"...new business contribution before tax came in at £91m, almost three times the figure for the full year last year..."

Telegraph - Standard Life profits down
"....Bruno Paulson, an analyst at Sanford C Bernstein, said: "The focus on pensions (and in particular on SIPPs) is paying off, as are the cost reductions and better product mix." But he added: "The £100m hit does assume that the pension market returns to normal in 2007, so there may be either more bad news on lapses to come, or a sales slow down next year......."

Guardian - Standard Life profits slump

BBC - Windfall cash-in at Standard Life
Includes some useful breakdown of the £100m provisions
"......it raised provisions to cover the cost of people leaving from £21m to £44m. The insurer also made a £79m provision after A-Day - the government's overhaul of pension savings rules - which saw customers consolidate their pensions........

..............In the lead up to the flotation, one of the major concerns was that customers might use the float as an opportunity to move their business elsewhere," said Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers. "The market must hope that today's reported increase in lapse provisions is not the thin end of the wedge and does not herald the beginning of an exodus."

ABC Money - Standard profits hit by policy encashment

The Motley Fool - A fine start for Standard Life -
According to TMF Standard is still a hold, and maybe a buy if the price slips back to 246p
"....there was good news in today's results statement. Standard Life's "share of the UK life and pensions market rose in the first half and profits improved."

....Traditionally, if a life insurance company trades on a multiple of one times EEV, it's seen as cheap. Prudential (LSE: PRU), for example, currently trades on a multiple of 1.4. At flotation, Standard Life's EEV multiple was just below 1. Today's new EEV per share figure is 246p, so at 268p, Standard Life trades on an EEV multiple of around 1.1.

Looking at the price/earnings ratio, analysts were forecasting earnings per share of 20.3p for the whole of 2006. That puts the company on a price/earnings ratio of 13, but I expect that analysts are probably cutting their full year forecasts today so the p/e ratio may rise a little.

Standard Life's relatively low EEV multiple reflects the fact that the company has its problems: departing customers after the IPO, a troubled healthcare business, declining market share in Canada, and uncertainty about future top management. But overall, I certainly don't think Standard Life is expensive, more like around fair value....." [Writes TMFArkle who had advised his readers to buy extra shares in the IPO]

Times - Standard hit as policyholders exit

Milarky

I'm just so, so, so glad that I no longer have a SL endowment policy... (sold on the 'first day' after receiving free shares.. ..kept the shares and bought more)

If SL were worried bout surrenders they were 'stuck' weren't they? They needed people to stay around to vote for it - so they couldn't cut policies any further in the run up - also they couldn't come clean (when have they?) and fix the with-profits distribution so that everyone suffered equally (e.g untization some time before vote/floatation) They were 'distracted' by the needs of the business - to make it look 'good' on paper. Too busy to address the needs of their policyholders.

I suggested before the shape of the DM shares-offer became clear that SL could have tried to think beyond the immediate date of floatation by offering progressive share options linked to policy premiums - eg for every £50 premium paid after an effective date for a period of (3? 5?) years a muliple (£100?) could be saved into a risk-free deposit account. At the end of the period the cash would be convertable to shares in the SL plc at a fixed price or discount. It might have occurred to them (maybe the floatation advisors said 'no' since they may not get as much quick profit themselves that way?) and they may have just done a float like everyone else because (like Tony Blair) they had left it too late in the day to convert and it would all have been too 'experimental'. But the point is that if they were really worried about surrenders (and their inability to hide them in the books) they could have cultivated their policyholders to stay. It seems therefore that they are not particularly unhappy to lose this trade.

ReportInvestor

Milarky wrote:

I suggested before the shape of the DM shares-offer became clear that SL could have tried to think beyond the immediate date of floatation by offering progressive share options linked to policy premiums - eg for every £50 premium paid after an effective date for a period of (3? 5?) years a muliple (£100?) could be saved into a risk-free deposit account. At the end of the period the cash would be convertable to shares in the SL plc at a fixed price or discount.

Maybe it was too complicated? Maybe they were too busy with the basics of flotation?

EdInvestor on this IA link is surprised that they didn't do more to tie investors into the company

Trevor Matthews, probable future CEO, had indicated Standard's intentions in this area in this Scotsman article. Standard working on switch

It looks like they didn't manage to pull it off.

Milarky

ReportInvestor wrote:

Trevor Matthews, probable future CEO, had indicated Standard's intentions in this area in this Scotsman article. Standard working on switch

It looks like they didn't manage to pull it off.

Hmmm, "Put it off", more likely. They've have 2 years to come up with something. (How many of their seven veils have they dropped by now?)

ReportInvestor

Uncertainty is a theme in the FT's Lex column. It talks about the pre-float "rocky road" continuing as a plc.

Uncertainty about the succession could be manageable, but the main point Lex raises is whether Standard Life has boosted new business, especially SIPPs, by churning people out of its old pensions products. If this was the case then the strong new business performance looks less impressive.

And if it was the case, surely Standard should have better forseen the lost old business, so that investors weren't hit by such a large & unexpected provision.

Lex doesn't give a recommendation to shareholders either way

But Standard had better not "drop any more veils" now that the FT has raised the possibility of "smoke & mirrors" within the results. We wouldn't want our dancing girl / emperor to be seen to have no clothes .

I thought it was significant that other papers decided not to give advice on Standard Life

The Times' vastly experienced and respect Robert Cole chose three smaller companies to comment on, although he well knows that Standard Life is likely to be a more interest to more of his readers. Why? Possibly because the results don't give him a clear enough picture on which to stake his reputation?

Cautious shareholders on MSE should perhaps take this into account when making up their minds whether to hold.

No-one can really know in this situation. Not a lot of help for GG as he contemplates his big decision .

ReportInvestor

Well would you look at that for a late afternoon performance in the face of all this doubt & uncertainty

Up 4p to 272p .

pauliepie

I have held an endowment policy with standard life since 1999.
Do you think I should sell the endowment?
Or should I get confirmation from SL to check on its progress.
Can you please advise me.
Thanks
paul

ReportInvestor

Hi pauliepie,

I suggest you post your question on the MSE mortgage/endowment board where there are plenty of informed posters.

Also read some of the past Standard endowment threads on that board.

You will need to get a surrender value from Standard as a basis for further discussion on the endowment forum.

Surrender or keep your policy? - IA link - might also give you some pointers

This thread is already so humungous that it's probably best to keep it restricted to the shares else we'll go off on a tangent in each individual policy case.

ReportInvestor

Finally a journalist is prepared to venture an opinion :eek: in the Daily Mail

It's a hard life but......

"....the army of private investors have no reason to panic just yet...."

ReportInvestor

Will Standard Life ever succumb to a bid? The idea probably provides some useful support for the shares over that difficult last week. [Don't forget that Standard - although steadyish - lost 2% versus the FTSE. It was not a good week for investors, even though we seemed to get away with it.]

e.g. Prudential were up 3% on Friday on (probably unsubstantiated) rumours.

The latest gossip, and previous bid comments, can be found on

Standard Life bid watch - IA link