Standard Life Shares

ReportInvestor

Some encouraging post-results comment in

The Sunday Herald

Switching "will die down" - Standard

And

Ned Cazalet backs Standard Life's "turnaround story"

"......Despite the [high policy redemption] figures [& unexpectedly low profits], Standard Life is pointing to continued success in turning the business round and its new emphasis on quality and profitability........

..........Ned Cazalet, a leading life insurance analyst and erstwhile fierce critic of Standard Life, said: “People are making far too much of these persistency figures. That is an irrelevance. You have to look at where Standard Life was two or three years ago and how far it has travelled to become what it is today. Back then it was on its knees and Sandy Crombie [its chief executive] has got stuck in and really gone back to fundamentals.

“What is going to matter is the strategy, where the company is going in terms of a radical re-thinking of how it does business in the coming years.”

## - RI - A few years ago, only three people outside the company understood Standard Life. Fred Woollard, maverick Edinburgh actuary Ronnie Sloan & Ned Cazalet. The old pro-mutual board was so scared of Cazalet that they threatened him with legal proceedings to shut him up during Woollard's campaign. Not surprisingly, because Cazalet was right & the board was wrong, these proceedings were quietly dropped after the board won the 2000 demutualisation vote.

Milarky

A few years ago, only three people outside the company understood Standard Life.

There's a book or two to write there then..?

ReportInvestor

It's partly a result of Standard Life being a mutual. If Standard or Equitable had had shareholders, then there would have been money available for outside analysts to study each company and ask the key questions.

The other part of the book is that the non-actuary directors at Standard Life didn't understand it either . The inner quartet of Standard Lifers made sure that no non-exective director was ever an actuary so that they could blind them with science.

Even the current chairman has admitted that he really know the company up until 3 years ago.

But I digress from the shares .

DocProc

I did a 'Google' and the following piece is one of the latest thorough media indications of how well Standard Life is fairing, following the RNS announcement concerning its Interim Results on Wednesday, 27th September. This article appeared the day after in 'The Scotsman':

From http://business.scotsman.com/index.cfm?id=1433162006

Standard Life hit for £100m by policy exits
Martin Flanagan
City Editor
Thu 28 Sep 2006

EDINBURGH life assurer Standard Life yesterday published maiden results as a publicly quoted company that were partly overshadowed by a £100 million provision for customers cashing in policies.

The significant increase in "lapses" was due to customers leaving the group after gaining their flotation windfalls and after changes to UK pension rules in the year.

Standard, which unveiled an interim operating profit before tax of £206m compared with £395m for the whole of 2005 when it was a mutual, said the so-called "A-day" changes to UK pension rules had affected the whole industry.

But Trevor Matthews, head of life and pensions at Standard's life and pensions arm, said the impact on the company had been stalled by the July flotation.

People had hung on for the windfalls before lapsing their policies. The split was £79m related to A-Day and £21m the demutualisation.

Matthews said: "Only in the last couple of weeks have we seen a change in behaviour. We've put a pretty hefty provision away to make sure we're in good shape. We expect [lapse] activity will wash itself out of the system over the remainder of the tax year [ending in April]."

One industry executive said: "It looks like Standard have erred on the side of over-prudence with the £100m. It could be that as a newly-quoted company it did not want to risk coming back to the market a few months down the road and saying any exceptional provision had to be added to."

Matthews played down the cashing in of policies, saying: "Churn is not necessarily a bad thing. Certainly we have been a [net] winner in that, as we have seen many come into our new SIPPs [self-invested personal pensions] product."

Standard Life's shares closed down 3.25p at 268p. Sandy Crombie, its group chief executive, said the underlying performance of the company in the period had been strong.

"New business contribution of £91m, almost three times the value for the whole of 2005, reflects the continued success of our strategy of concentrating on higher margin products which require lower capital investment."

Crombie cited SIPPs and single-premium investment bonds as big success stories.

Life and pensions profit margins under the restructured business model have leapt from 0.4 per cent to 1.6 per cent. Life and pensions sales jumped 25 per cent to £594m, pushing the company's UK market share up to 9.2 per cent from 8.4 per cent in 2005.

Life and pensions' interim UK operating profits came in at £148m compared with £272m for the whole of 2005.

Crombie said Standard Life Investments, its fund management arm, had continued to power ahead, with profits of £14m against £24m in 2005.

Total SLI funds under management stand at £123.4 billion, up from £118.8bn at the end of 2005.

Standard Life Bank made a profit of £17m compared to a 12-month profit of £24m in 2005. The health and general insurance arm contributed £3m (£11m).

One analyst commented: "Provisions notwithstanding, the underlying performance looks fine on sales, market share and margins. It looks on track."

Crombie repeated that he intended to stay at least until 2009 in the driving seat at Standard when he will be 60 years old.

But he would not put an exact timescale on when he would step down. "I'm just not going to do one of those Tony Blair things", alluding to the Prime Minister's announcement of his impending retirement.

Chrismaths

citywire
"The City took a dim view of Standard Life’s interim results after the life insurer was forced to put aside £100 million to cover lapsed business, primarily in the pensions sector.

Despite this, the Edinburgh-based company announced pre-tax operating profit for the first half of £206 million compared with £395 million for the whole of 2005.

Among the firm’s critics was analyst Greig Paterson, of Keefe, Bruyette & Woods, who confessed he had not expected management to make a lapse provision at this stage.

He said: ‘We see retail [investors] selling in the third quarter of 2006 after the allocation of the 1:20 free shares at the time, as the main catalyst for a derating [of the stock].’

Paterson believed management was playing down the prospects of its wrap, indicating it would need £5 billion to £10 billion of assets under management to break even.

Lehman Brothers recommended investors switch into Friends Provident or Prudential , while Credit Suisse expected Standard to underperform due to the pension lapses that are expected to soak up £79 million of the £100 million provision.

Clive Beagles, manager of the JO Hambro Capital Management UK Equity Income fund , is a fan of the relatively low valuations to be found in the life insurance sector. He said observers expected a lapse provision closer to £70 million.

But Beagles, who holds stakes in Aviva , Legal & General and Old Mutual , said his dissatisfaction with the firm is deeper. ‘For us the management of Standard Life is a big issue. Many of them are the same people that almost made the company bankrupt two or three years ago.’

Sandy Crombie, Standard Life group chief executive, said the increased lapse rate was due to people postponing their A-Day planning until after demutualisation.

‘This is an industry-wide activity but we believe Standard Life will be a net beneficiary.’

Standard Life has seen a sharp rise in new business this year. New business contributions for the six months to 30 June were £91 million compared with £33 million for the whole of 2005.

The insurer is reporting £100 million a month in positive net inflows into the pensions area.

But analysts reported that 20% of Standard Life’s surrenders are retained in the group and booked as new business."

ReportInvestor

1% drift down on Wednesday compared to the FTSE - Yahoo chart

This is probably the ongoing fall-out from the disappointing results.

With so many retail investors, rather than professional/institutional investors, I suspect that the share price may react a bit more slowly than at other companies.

Scroll down this ShareCrazy link to get to the graph

I don't like how Standard has now broken back down through the moving average on its chart .

DocProc

Here's a 3 month chart comparing SL.L versus UKX.L (UK FTSE 100) :-

http://uk.finance.yahoo.com/q/bc?t=3m&s=SL.L&l=on&z=m&q=l&c=ukx.l

suitusir

Hi,

Price is down a little yesterday and today as everybody sells on news,

Standard life is a now a company going forward and when thefull eeffect of the FSA reducing cash reserves (one of the main points SL. had to demtuilize) is relaxed it will be quite agressive buying other companies.

Still think Australian company or US company will come in and buy Standard.

I own 6000 shares.


I hope the above helps,

Keep smiling


Kevin

ReportInvestor

Welcome on board, Kevin.

I'm agree that Standard could make an excellent UK entry point for a foreign insurer.

Here's hoping.

RI (down to my last 5,000 ).

suitusir

Hi Ri,

I think with Standards client bank and cash reserves and the cheap price it could be bought for, then its a prime target for a takeover I think from memory they rebuffed two approaches before takeover. Will be interesting to see how it pans out, but I can not see any downside on this stock, or course price may drop but its agreatbuying opportunity.


I could not believe my eyes when buy price was £218.5 pence, its was a steal.

I do fancy that an Australian company will buy Standard Life.

Here's hoping anyway,

Keep smiling

Kevin