Standard Life Shares Jump After First-Half Profit Rises

Aug 05, 2014 12:02 pm ET

(Updates with closing share prices in second paragraph.)

Aug. 5 (Bloomberg) -- Standard Life Plc, Scotland’s largest insurer, rose in London trading after reporting a 12 percent increase in first-half pretax operating profit.

The shares closed up 1.5 percent to 370 pence after advancing as much as 3 percent. Prudential Plc, the U.K.’s biggest insurer by market value, was down 0.7 percent and the 32-member Bloomberg Europe 500 Insurance Index increased 0.2 percent.

Operating profit swelled to 339 million pounds ($571.8 million) as fee-based revenue grew 9 percent, Edinburgh-based Standard Life said in a statement today. It increased its interim dividend by 7.3 percent to 5.60 pence a share.

The company reported “a solid set” of first-half figures, Barrie Cornes, an analyst at Panmure Gordon in London, said in an e-mailed report to clients. “The shares have traded sideways in 2014 reflecting investment markets, but the outlook remains positive and we think that Standard Life will be a net beneficiary of the proposed changes to retirement products in the U.K.”

Standard Life, which was founded in 1825, said uncertainty about Scotland’s independence hasn’t led to clients withdrawing funds. The company is among Edinburgh’s biggest employers along with Royal Bank of Scotland Group Plc.

Chief Executive Officer David Nish said on a call with journalists today that he was “unaware of any significant amount of money being withdrawn,” and has “continued to look at different ways of how we could react,” as Scotland holds a referendum on independence on Sept. 18.

Annuity Impact

Standard Life had 270 million pounds wiped off its market value in March after the U.K. Chancellor of the Exchequer George Osborne scrapped rules that pushed retirees to buy an annuity. The firm today reported a 59 percent decline in margins from annuity new business sales. Profit contribution of new business from annuities last year was 6 percent, the insurer said in April.

“We have an excellent track record of succeeding in evolving markets,” Nish said in the statement. “We are well placed to deal with the far-reaching reforms to the savings and retirement income rules, announced earlier this year by the U.K. government.”

About 70 percent of Standard Life’s customers retiring choose an option other than a Standard Life annuity, Steve Hartley, a company spokesman, said by e-mail.

Assets under management rose 4 percent in the first half to 254.1 billion pounds, led by net inflows of 4.6 billion pounds.

--With assistance from Ambereen Choudhury in London.