News Column

Standard Life Laments Annuity Changes Despite Strong Q1

April 30, 2014

Anthony Tshibangu

LONDON (Alliance News) - Standard Life PLC Wednesday said its assets under administration increased 1.5% in the first quarter driven by net inflows, but said recent changes to annuity regulations in the UK resulted in a reduction in UK annuity sales of around 50%.

The Edinburgh-based long-term savings and investments provider said assets under administration totalled GBP247.8 billion at March 31, up from GBP244.2 billion on December 31, 2013, and up from GBP233.1 billion on March 31, 2013, boosted by net inflows of GBP2.4 billion and a "limited benefit from market movements partly offset by the negative impact of foreign exchange".

However it said it had been affected by recent changes announced by the UK Chancellor George Osborne with regards to the UK annuity market. The Chancellor did away with compulsory purchases of annuities, giving people more flexibility over how they manage their pension pots as they plan for retirement.

"While it will be some time before long-term trends become clear, the negative profit impact of the changes will reflect the relatively small size of our annuity business," the firm said.

Standard Life said fee revenue across the group rose 12% to GBP374 million reflecting a combination of continued strong net flows over recent periods and higher average market levels compared with the first quarter a year earlier.

The company said its asset management business Standard Life Investments also performed strongly during the quarter, with third-party assets under management increasing to GBP104.8 billion up from GBP102.4 billion reflecting strong third-party net inflows in the quarter of GBP2.0 billion.

Standard Life said its balance continues to be "robust" with an estimated insurance group directive (IGD) surplus of GBP3.9 billion, up from GBP3.8 billion at the end of December, but down slightly from the GBP4.2 billion recorded at March 31, 2013.

The IGD surplus is a UK Financial Services Authority regulatory measure which calculates surplus capital within the group.

Standard Life also said its acquisition of Ignis Asset Management is progressing well whilst awaiting regulatory approval. It said the deal will enhance its "strategic positioning through deepening our investment capabilities and broadening our third party client base".

Looking ahead the firm said although investment markets and exchange rates may affect the pace of growth, it remains very well positioned for the future and "looks forward with confidence to delivering growing returns for our shareholders".

The stock was trading at 372.80 pence Wednesday morning, down 3.4%.

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Source: Alliance News

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