Standard Life to present float plan to policyholders

Standard Life to present float plan to policyholders

	Published : Fri, 14 Apr 2006 12:20 By : Phil Bateman Print this Story

LONDON: Standard Life Assurance Co. is set to reveal Tuesday details of its turnaround strategy and tell its 2.4 million members what they would gain if they back the firm's plan to float on the stock exchange.

The company, Europe's largest customer-owned insurer, will send information packs to its policyholders detailing the plans and its financial results for the past two years, after the Court of Session in Edinburgh gave it approval to present the proposal to its policyholders, who are eligible to vote and will qualify for a pay-out if the listing goes ahead. The financial results include a loss incurred in 2004. The members are to vote deciding for or against the flotation on 31 May.

Analysts feel the firm will get the backing for the floatation, which will be the largest since telecom company Orange raised 1 billion pounds in 2001. However, the policyholders will critically look at the company's performance and ensure that it is able to make a turnaround. On listing, analysts estimate the insurer to have a market value in the range of 4 billion pounds to 6 billion pounds.

Standard Life had planned to go public about two years ago, as it wanted cash for operations in the light of declining market for its prime with-profits products and the unfriendly funding rules.

The firm's chief executive officer Sandy Crombie has been an ardent proponent of demutualisation as he feels that is the only way for the firm to grow. The move has to have the support of three-quarters of the voting members.

The insurer aims to raise about 1 billion pounds from listing. Policyholders are expected to be given an average payout of between 500 pounds and 1,000 pounds each. This is against an estimated 6,300 pounds each policyholder would have got under a proposed listing in 2000, which was vehemently opposed by the management, interestingly including Crombie. He justified the action, saying the insurer has a need for the money now that it did not have in 2000. It needs to raise money to "run the business" he said.

The firm had suffered investment losses after selling 7.5 billion pounds of stocks in 2004 to meet stricter rules from the Financial Services Authority.

Founded in 1825, Standard Life is owned by its with-profits policyholders. These policies accounted for about 50 per cent of the company's assets in 2000 compared with a third now.

The company's share of the U.K. market had come down to 7.2 per cent at the end of the third quarter from 8.2 per cent at the end of the second quarter. It has joint ventures in China and India, which account for a large chunk of its total sales.