New Business Results
Standard Life plc
01 August 2006
Accelerated growth
New business results - six months to 30 June 2006
1 August 2006
• Worldwide insurance APE sales up 17% to £745 million (2005: £624m)
• UK Life and Pensions APE sales up 25% to £594m (2005: £475m), with a
36% increase in the second quarter of 2006 (compared to the second quarter of
2005)
- Self Invested Personal Pension (SIPP) and drawdown APE sales up 75% to
£105m (2005: £60m)
- Investment bond APE sales up 121% to £86m (2005: £39m)
• Net investment product inflows of £3,120m (2005: £2,643m)
All comparisons above and in narrative below are in local currencies unless
otherwise stated1.
First Half Overview
Worldwide insurance APE sales increased by 17% to £745m, reflecting strong UK
performance. UK Life and Pensions APE sales increased by 25% in H1 2006, driven
by continuing strong sales of SIPP and Investment Bonds. Standard Life
Investments enjoyed a strong first half with net investment product inflows of
£3.1bn and third party funds under management increased by 12% to £31.5bn over
the first six months of the year.
Group Chief Executive, Sandy Crombie, said:
'I am pleased to be able to report a substantial increase in new business for
Standard Life in the first half of the year. We have built on good growth in
the first quarter, with an accelerated rate of increase in the second quarter,
giving us a solid foundation for the remainder of the year. It is particularly
pleasing to see strong performance in our target markets in the UK, notably SIPP
and investment bonds. Standard Life Investments also continues to perform well,
despite the recent volatility in equity markets.
'Our transition to higher margin and higher value-added savings products
continues, and I am confident that we are securing the right mix of new business
to deliver profitable growth for our shareholders.'
UK and Europe Life and Pensions
New business in UK Life and Pensions was strong in the first half of 2006, with
APE sales up 25% to £594m (2005: £475m). Following a good first quarter, sales
have continued to be strong through the second quarter. Consistent with our
focus on profitable segments of the market, single premiums have increased by
52% in the first half of 2006, while regular premiums were up 3%.
A substantial contribution to this increase came from the company's highly
successful SIPP and drawdown product where first half sales increased by 75% to
£105m (2005: £60m) and funds under management grew 79% to £2.2bn. This strong
trend has continued beyond A-day(2) and throughout the second quarter, with over
70% of SIPP assets now being managed by Standard Life Investments or deposited
with Standard Life Bank.
Product improvements and the strong performance of many of the key funds within
Standard Life Investments' range have led to strong growth in investment bonds
increasing by 121% to £86m (2005: £39m). Trustee Investment Pension Plan (TIPP)
and Personal Pension Investment Plan (PPIP)* sales have increased 67% to £77m
(2005: £46m).
Group Pensions business fell by 2% to £228m (2005: £233m) reflecting a strong
first quarter in 2005, which included the company's largest ever insured group
scheme. Q2 2006 shows a favourable trend with sales up 17% to £131m (Q2 2005:
£112m). Group pensions included the new Group SIPP, launched in November 2005,
which had APE sales in the first half of £22m.
In line with our strategy, we have continued to diversify our distribution
capability by securing arrangements in potentially profitable growth areas as
well as building on previous alliances. Sales through consulting actuaries
increased by 61% to £71m (2005: £44m).
Outside the UK, the second quarter saw an increase in sales in Germany of 38% to
£10m (Q2 2005: £7m). Overall new business for the first half of 2006, however,
was down 52% to £21m (2005: £41m) reflecting the comparison with a very strong
first quarter in 2005 which was caused by changes to tax legislation.
Standard Life Ireland increased sales by 64% to £18m (2005:£11m) with strong
performance in both quarters. This increase in sales has been driven by the
success of the Synergy suite of products launched in the first half of 2005. In
the second quarter of 2006 Standard Life introduced new products to the Irish
market based on the UK SIPP platform and early demand is encouraging.
*TIPP is a Trustee Investment Pension Plan designed to meet the needs of
Trustees of exempt approved occupational pension schemes (defined benefit,
defined contribution and SSAS schemes). PPIP is a Personal Pension Investment
Plan. It is a version of TIPP available to managers of SIPPs that are
administered externally to Standard Life.
Canada
Sales for the 6 months to 30 June 2006 increased in local currency by 3% to £99m
(2005: £84m).
Our first half 2006 volumes in the competitive group savings and retirement
market were 49% higher, helped by one large scheme of £22m APE written in the
second quarter.
Individual insurance, savings and retirement declined 28%. This reflected the
repricing of our main universal life product in 2005 where sales fell to £4m
(2005: £10m).
Group insurance sales fell 40% in a challenging market. We continue to
prioritise retention and maintain our focus on margin instead of volume.
Asia
In India, HDFC Standard Life Insurance Company Limited increased sales by 65%3
to £70m (2005: £42m) of which Standard Life's share was £12m (2005: £11m),
whilst in China, Heng An Standard Life opened its third branch, in Beijing.
Standard Life Investments
Standard Life Investments (SLI) has achieved another very strong result, despite
increasing volatility in markets over the first six months of the year. Net
inflows for investment products were £3,120m (2005: £2,643m). UK mutual fund
net inflows were strong at £684m (2005: £78m).
At 30 June 2006, total SLI funds under management were £123.4bn, up from
£118.8bn at the end of 2005. Third party funds under management stood at
£31.5bn, up from £28.1bn.
The UK Select Property Fund, launched in October 2005, has been particularly
successful with funds under management of £482m at 30 June 2006. Total property
funds under management have grown over the first six months of the year from
£10.4bn to £12bn.
Standard Life Bank
Gross mortgage lending in the second quarter grew by 4% compared with the first
quarter, though it fell by 16% to £1,216m over the half year (2005: £1,442m).
The Bank continues to develop the management of cash funds in partnership with
the Life and Pensions business, particularly the SIPP cash element, which grew
113% to £175m in the first half of 2006.
Standard Life Healthcare
First half sales were £10m (2005: £11m) reflecting competitive pressure in both
the small and medium enterprise (SME) and individual markets.
For further information please contact:
Media:
Barry Cameron 0131 245 6165 / 07712 486 463
Emma Wylie 0207 872 4154 / 07712 486 444
Neil Bennett (Maitland) 0207 379 5151 / 07900 000 777
Equity Investors:
Gordon Aitken 0131 245 6799
Gillian Bailey 0131 245 1110
Debt Investors:
John Cummins 0131 245 5195
Georgina Marshall 0131 245 9798
Notes to Editors
1. Insurance new business and Investment gross sales for overseas
operations are calculated using average exchange rates. All percentage changes
shown for new business are based on constant exchange rates. The principal
average exchange rates for six months to 30 June 2006 are £1: C$2.03 (six months
to 30 June 2005 £1: C$2.31) and £1: Euro1.45 (six months to 30 June 2005 £1:
Euro1.46). Funds under management are calculated using the closing exchange
rate as at period end. The principal closing exchange rates used as at 30 June
2006 are £1: C$2.06 (31 December 2005 £1: C$2.01) and
£1: Euro1.45 (31 December 2005 £1: Euro1.46).
2. A new pensions simplification regime in the UK was introduced on 6 April
2006, also known as A-Day.
3. Standard Life has two joint venture partnerships with HDFC: a life
insurance company HDFC Standard Life Insurance Limited, in which it holds just
under 19% and HDFC Asset Management Company, in which it holds 49.9%. Standard
Life's holding in HDFC Standard Life Insurance Limited changed during the period
and the results for the period to 30 June 2006 are based on a weighted average
holding of 17.3% (30 June 2005: 26%). The growth percentages quoted for India
relate to the results of HDFC Standard Life Insurance Limited, rather than the
growth in Standard Life's share of the joint venture.
4. Annual Premium Equivalent (APE) sales comprise new regular premium sales
plus 10% of single premiums.
5. All financial information in this release is unaudited.
6. The insurance operations new business shown within the attached tables
includes certain products which do not fall within the scope of 'insurance
contracts' as defined by IFRS4 'Insurance Contracts' as they do not contain
sufficient insurance risk. However, the classification of products into
investment or insurance operations is consistent with previous new business
reports and is in accordance with FSA recognition rules for new business.
7. All comparators are with the first half of 2005 unless otherwise stated.
8. The Standard Life Assurance Company will announce its interim mutual
IFRS results on 27 September 2006. In addition, we will publish financial
highlights, consistent with the basis of preparation disclosed in the
prospectus, for the first 6 months of 2006 on a historical financial information
basis (IFRS) and also on a proforma IFRS and EEV basis. There will be no
comparable data for the first half of 2005, since The Standard Life Assurance
Company was not required to prepare such figures. Present Value of New Business
Premium (PVNBP) data for the first half of 2006 will be published with these
results.
9. There will be a conference call today for media at 8.00am (BST) hosted
by Alison Reed, Group Finance Director. Dial in telephone number: +44 (0)20
7162 0125. Callers should quote Standard Life Media Conference.
10. There will be a conference call for investors and analysts at 9.30am (BST)
hosted by Alison Reed, Group Finance Director. Dial in telephone number +44 (0)
20 7162 0025. Callers should quote Standard Life Investor and Analyst
Conference. A recording of this call will be available for replay for one week
by dialling +44 (0)20 7031 4064. The conference reference number will be
714387.
Standard Life New Business
6 month period ended 30 June 2006
Insurance
Products
Single Premiums New Regular Premiums Annual Premium Equivalent (APE) (a)
6 6 % 6 6 % 6 6 % % Change
Months Months Change Months Months Change Months Months Change in local
to to to to to to currency
30 June 30 June 30 June 30 June 30 June 30 June (b)
2006 2005 2006 2005 2006 2005
£m £m £m £m £m £m
UK Life and Pensions 3,242 2,128 52% 270 262 3% 594 475 25% 25%
Canada 637 413 54% 35 43 -19% 99 84 18% 3%
International 128 86 49% 40 57 -30% 52 65 -20% -19%
Total Worldwide
Insurance 4,007 2,627 53% 345 362 -5% 745 624 19% 17%
Investment
Products
Gross Sales Net Inflows
6 Months 6 Months % Change 6 Months 6 Months to % Change
to to to 30 June
30 June 30 June 30 June 2005
2006 2005 2006
£m £m £m £m
UK (c) 3,142 2,957 6% 2,799 2,733 2%
Canada 230 206 12% 90 (99) N/A
International (d) 421 9 4578% 231 9 2467%
Total Worldwide 3,793 3,172 20% 3,120 2,643 18%
Investment
Banking 6 Months 6 Months to % Change
to 30 June
30 June 2005
2006
£m £m
Gross Mortgage 1,216 1,442 -16%
Lending
SL Healthcare(e)
New Business Sales
6 Months to 6 Months to
30 June 30 June % Change
2006 2005
£m £m
New Business 10 11 -9%
Sales
(a) Annual Premium Equivalent (APE) is the industry standard for measuring new
business income and represents all new regular premiums and 10% of single
premiums.
(b) The percentage change in local currency is calculated using constant rates
of exchange.
(c) The Triple A fund within UK Investment sales is calculated using average net
client balances.
(d) Due to the nature of the Indian investment sales market, Indian new business
is shown as net of sales less redemptions.
(e) SL Healthcare's new business was previously included within Insurance
Products, but is now shown separately.
Insurance Operations New Business
6 month period ended 30 June 2006
Single Premiums New Regular Premiums Annual Premium Equivalents (APE)
Analysed by geographical
region
6 6 6 6 6 6
Months Months Months Months Months Months % Change
to to % to to % to to % in local
30 June 30 June Change 30 June 30 June Change 30 June 30 June Change currency
2006 2005 2006 2005 2006 2005 (a)
£m £m £m £m £m £m
UK
Individual Pensions 417 400 4% 32 37 -14% 74 77 -4% -4%
SIPP & Drawdown 790 514 54% 26 9 189% 105 60 75% 75%
Group Pensions 211 191 10% 207 214 -3% 228 233 -2% -2%
Investment (TIPP and 767 459 67% 0 0 N/A 77 46 67% 67%
PPIP)
Investments Bonds 868 388 124% 0 0 N/A 86 39 121% 121%
Offshore Bond 15 0 N/A 0 0 N/A 2 0 N/A N/A
Annuities 168 175 -4% 0 0 N/A 16 17 -6% -6%
Protection 0 0 N/A 4 2 100% 4 2 100% 100%
Other 6 1 500% 1 0 N/A 2 1 100% 100%
UK Life and Pensions 3,242 2,128 52% 270 262 3% 594 475 25% 25%
Canada
Group savings and 399 180 122% 21 18 17% 61 36 69% 49%
retirement
Individual insurance, 238 233 2% 5 12 -58% 29 35 -17% -28%
savings & retirement
Group insurance 0 0 N/A 9 13 -31% 9 13 -31% -40%
Canadian Insurance 637 413 54% 35 43 -19% 99 84 18% 3%
International (Excluding
Canada)
Republic of Ireland 103 58 78% 8 5 60% 18 11 64% 64%
Germany 16 19 -16% 19 40 -53% 21 41 -49% -52%
India (b), (c) 3 3 75%(b) 12 11 68%(b) 12 11 68%(b) 65% (b)
China(c) 6 1 500% 1 0 N/A 1 0 N/A N/A
Life and Pensions 128 81 58% 40 56 -29% 52 63 -17% -19%
Discontinued operations(d) 0 5 N/A 0 1 N/A 0 2 N/A N/A
International (Excluding 128 86 49% 40 57 -30% 52 65 -20% -19%
Canada) Insurance
Total Worldwide Insurance 4,007 2,627 53% 345 362 -5% 745 624 19% 17%
(a) The percentage change in local currency is calculated using constant rates
of exchange.
(b) The percentage change figures for India are computed based on the percentage
movement in the new business of HDFC Standard Life Insurance Limited to avoid
distortion due to changes in the Group's shareholding in the joint venture
during 2005 and 2006.
(c) Amounts shown reflect Standard Life's share of the Joint Venture Company's
new business.
(d) Spanish business is shown as discontinued as it was disposed of in 2005.
Investment Operations
6 month period ended 30 June 2006
Market & Net
Opening Other Movement
FUM Gross Redemptions Net Movements in FUM Closing
Sales Inflows FUM
01/01/ 30/06/
2006 2006
£m £m £m £m £m £m £m
UK Mutual Funds 2,862 883 (a) (199) 684 (12) 672 3,534
Private Equity 1,580 205 (31) 174 21 195 1,775
Segregated Funds 5,915 1,090 (b) (113) 977 195 1,172 7,087
Pooled Property Funds 438 49 (b) 0 49 35 84 522
Triple A 4,421 915 (c) 0 915 (544) 371 4,792
Total UK 15,216 3,142 (343) 2,799 (305) 2,494 17,710
Canada Mutual Funds 1,019 187 (d) (77) 110 (34) 76 1,095
Investment Counselling 976 43 (63) (20) 81 61 1,037
Total Canada 1,995 230 (140) 90 47 137 2,132
International Europe 29 6 (4) 2 (6) (4) 25
Hong Kong 175 0 (186) (186) 12 (174) 1
India 1,137 415 (e) 0 415 (123) 292 1,429
Total International 1,341 421 (190) 231 (117) 114 1,455
Total Worldwide Investment Products 18,552 3,793 (673) 3,120 (375) 2,745 21,297
Total third party funds under management comprise the investment business noted
above together with third party insurance contracts. New business relating to
third party insurance contracts is disclosed as insurance business for reporting
purposes. An analysis of total third party funds under management is shown
below.
Standard Life Investments
Market & Net
Opening Other Movement
FUM Gross Redemptions Net Movements in FUM Closing
Inflows Inflows FUM
01/01/ 30/06/2006
2006
£m £m £m £m £m £m £m
Investment Products 18,552 3,793 (673) 3,120 (375) 2,745 21,297
Third party insurance contracts 9,577 1,020 (601) 419 174 593 10,170
(new business classified as
insurance products)
Third party funds under management 28,129 4,813 (1,274) 3,539 (201) 3,338 31,467
Standard Life Investments - total 118,842 123,419
funds under management
(a) UK Mutual Fund gross sales and net inflows were £235m and £78m respectively
in the 6 months to 30 June 2005.
(b) Institutional sales comprise Segregated and Pooled Property Fund sales.
(c) Due to the nature of the Triple A fund the inflows shown are calculated
using average net client balances. Other movements are derived as the difference
between these average net inflows and the movement in the opening and closing
FUM.
(d) Canadian Mutual Fund gross sales and net inflows were £147m and £110m
respectively in the 6 months to 30 June 2005.
(e) As a result of the sales market volatility in India, Investment sales are
shown as net of sales less redemptions.
Standard Life New Business
3 month period ended 30 June 2006
Insurance
Products
Single Premiums New Regular Premiums Annual Premium Equivalent (APE) (a)
3 Months 3 Months 3 Months 3 Months 3 Months 3 Months % Change
to to % to to % to to % Change in local
30 June 30 June Change 30 June 30 June Change 30 June 30 June currency
2006 2005 2006 2005 2006 2005 (b)
£m £m £m £m £m £m
UK Life and 1,738 1,140 52% 156 129 21% 331 243 36% 36%
Pensions
Canada 357 192 86% 17 24 -29% 55 44 25% 10%
International 62 47 32% 18 16 13% 23 21 10% 10%
Total 2,157 1,379 56% 191 169 13% 409 308 33% 30%
Worldwide
Insurance
Investment
Products
Gross Sales Net Inflows
3 Months 3 Months % Change 3 Months 3 Months to % Change
to to to 30 June
30 June 30 June 30 June 2005
2006 2005 2006
£m £m £m £m
UK(c) 1,051 2,064 -49% 846 1,995 -58%
Canada 81 77 5% (3) (21) N/A
International(d) 210 12 1650% 20 12 67%
Total Worldwide 1,342 2,153 -38% 863 1,986 -57%
Investment
Banking 3 Months 3 Months % Change
to to
30 June 30 June
2006 2005
£m £m
Gross Mortgage 620 820 -24%
Lending
SL Healthcare (e)
New Business Sales
3 Months 3 Months
to to % Change
30 June 30 June
2006 2005
£m £m
New Business Sales 5 6 -17%
(a) Annual Premium Equivalent (APE) is the industry standard for measuring new
business income and represents all new regular premiums and 10% of single
premiums.
(b) The percentage change in local currency is calculated using constant rates
of exchange.
(c) The Triple A fund within UK Investment sales is calculated using average net
client balances.
(d) Due to the nature of the Indian investment sales market, Indian new business
is shown as net of sales less redemptions.
(e) SL Healthcare's new business was previously included within Insurance
Products, but is now shown separately.
Insurance Operations New Business
3 month period ended 30 June 2006
Single Premiums New Regular Premiums Annual Premium Equivalents (APE)
Analysed by
geographical region
3 Months 3 Months 3 3 3 3 % Change
to to % Months Months % Months Months % in local
30 June 30 June Change to to Change to to Change currency
2006 2005 30 June 30 June 30 June 30 June (a)
2006 2005 2006 2005
£m £m £m £m £m £m
UK
Individual Pensions 184 147 25% 19 17 12% 38 32 19% 19%
SIPP & Drawdown 449 323 39% 16 7 129% 61 39 56% 56%
Group Pensions 119 82 45% 119 104 14% 131 112 17% 17%
Investment (TIPP 418 278 50% 0 0 N/A 42 28 50% 50%
and PPIP)
Investments Bonds 443 228 94% 0 0 N/A 44 23 91% 91%
Offshore Bond 7 0 N/A 0 0 N/A 1 0 N/A N/A
Annuities 115 82 40% 0 0 N/A 11 8 38% 38%
Protection 0 0 N/A 2 1 100% 2 1 100% 100%
Other 3 0 N/A 0 0 N/A 1 0 N/A N/A
UK Life and Pensions 1,738 1,140 52% 156 129 21% 331 243 36% 36%
Canada
Group savings and 254 84 202% 11 12 -8% 37 20 85% 61%
retirement
Individual 103 108 -5% 1 6 -83% 13 18 -28% -35%
insurance, savings
& retirement
Group insurance 0 0 N/A 5 6 -17% 5 6 -17% -29%
Canadian Insurance 357 192 86% 17 24 -29% 55 44 25% 10%
International
(Excluding Canada)
Republic of Ireland 50 32 56% 4 2 100% 9 6 50% 70%
Germany 8 11 -27% 10 6 67% 10 7 43% 38%
India (b), (c) 1 2 30% (b) 4 8 55% (b) 4 8 54% (b) 66% (b)
China (c) 3 1 200% 0 0 N/A 0 0 N/A N/A
Life and Pensions 62 46 35% 18 16 13% 23 21 10% 10%
Discontinued 0 1 N/A 0 0 N/A 0 0 N/A N/A
operations (d)
International 62 47 32% 18 16 13% 23 21 10% 10%
(Excluding Canada)
Insurance
Total Worldwide 2,157 1,379 56% 191 169 13% 409 308 33% 30%
Insurance
(a) The percentage change in local currency is calculated using constant rates
of exchange.
(b) The percentage change figures for India are computed based on the percentage
movement in the new business of HDFC Standard Life Insurance Limited to avoid
distortion due to changes in the Group's shareholding in the joint venture
during 2005 and 2006.
(c) Amounts shown reflect Standard Life's share of the Joint Venture Company's
new business.
(d) Spanish business is shown as discontinued as it was disposed of in 2005.
Investment Operations
3 month period ended 30 June 2006
Market & Net
Opening Other Movement
FUM Gross Redemptions Net Movements in FUM Closing
Sales Inflows FUM
01/04/ 30/06/
2006 2006
£m £m £m £m £m £m £m
UK Mutual Funds 3,348 463 (a) (112) 351 (165) 186 3,534
Private Equity 1,740 62 (13) 49 (14) 35 1,775
Segregated Funds 6,585 795 (b) (80) 715 (213) 502 7,087
Pooled Property Funds 488 22 (b) 0 22 12 34 522
Triple A 5,037 (291) (c) 0 (291) 46 (245) 4,792
Total UK 17,198 1,051 (205) 846 (334) 512 17,710
Canada Mutual Funds 1,134 76 (d) (38) 38 (77) (39) 1,095
Investment Counselling 1,048 5 (46) (41) 30 (11) 1,037
Total Canada 2,182 81 (84) (3) (47) (50) 2,132
International Europe 36 0 (4) (4) (7) (11) 25
Hong Kong 188 0 (186) (186) (1) (187) 1
India 1,391 210 (e) 0 210 (172) 38 1,429
Total International 1,615 210 (190) 20 (180) (160) 1,455
Total Worldwide Investment Products 20,995 1,342 (479) 863 (561) 302 21,297
Total third party funds under management comprise the investment business noted
above together with third party insurance contracts. New business relating to
third party insurance contracts is disclosed as insurance business for reporting
purposes. An analysis of total third party funds under management is shown
below.
Standard Life Investments
Market & Net
Opening Other Movement
FUM Gross Redemptions Net Movements in FUM Closing
Inflows Inflows FUM
01/04/ 30/06/2006
2006
£m £m £m £m £m £m £m
Investment Products 20,995 1,342 (479) 863 (561) 302 21,297
Third party insurance contracts 10,177 558 (329) 229 (236) (7) 10,170
(new business classified as
insurance products)
Third party funds under management 31,172 1,900 (808) 1,092 (797) 295 31,467
Standard Life Investments - total 124,835 123,419
funds under management
(a) UK Mutual Fund gross sales and net inflows were £125m and £32m respectively
in the 3 months to 30 June 2005.
(b) Institutional sales comprise Segregated and Pooled Property Fund sales.
(c) Due to the nature of the Triple A fund the inflows shown are calculated
using average net client balances. Other movements are derived as the difference
between these average net inflows and the movement in the opening and closing
FUM.
(d) Canadian Mutual Fund gross sales and net inflows were £73m and £56m
respectively in the 3 months to 30 June 2005.
(e) As a result of the sales market volatility in India, Investment sales are
shown as net of sales less redemptions.
ENDS
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