STANDARD Life has appointed one of the UK’s highest profile actuaries in a significant step towards its forthcoming flotation, The Scotsman can reveal.
The life insurance giant has brought in Michael Arnold - who played an integral role in the demutualisation of Scottish Widows and Scottish Provident, as well as the formation of Equitable Life’s compromise scheme - as it gears up for a 2006 stock market listing. The next year will see the Edinburgh-based firm vie to get its business in optimal shape. Job losses and a drive to ditch "bad" business in favour of more profitable mandates are likely.
Standard Life must attain approval from the Financial Services Authority, Scottish Court of Session and an independent actuary, as well as 75 per cent of its members, to push through the planned demutualisation. Arnold’s appointment has been approved by the FSA.
The independent actuary will play a key role in Standard Life’s demutualisation team, with responsibility for ensuring qualifying with-profits policyholders receive a fair deal.
A spokesman for Standard Life yesterday confirmed the appointment, saying: "His experience in dealing with the treatment of life companies’ policyholders at times of re-organisation is second to none."
A principal and head of the life practice at consultant Milliman in London, Arnold has built a strong reputation in acting as independent actuary for a string of life companies and funds over the past decade. In 1999, he acted for Widows’ demutualisation, which saw it become a new subsidiary of the UK’s fifth largest bank, Lloyds TSB, in March 2000.
A year later, he fulfilled the same role at Friends Provident Life Office, which transferred to a newly-authorised company before its holding firm floated on the Stock Exchange; Scottish Life, which demutualised by transfer to Royal London Mutual Insurance Society and Scottish Provident, which transferred to Abbey National.
Arnold was also the independent expert involved in the thrashing out of Equitable’s compromise deal in 2002. That saw the mutual’s guaranteed annuity rate (GAR) policyholders give up their rights in exchange for an increase in their policies’ value and non-GAR members pledge not to sue the society for mis-selling. More recently, he was appointed to Prudential’s with-profits committee.
The appointment is an important part of the demutualisation process. Standard Life is also expected to trim its workforce by up to 8 per cent through natural attrition. That could see 960 jobs go from the group, which employs 12,000 staff worldwide, of which about 8,000 are in Edinburgh. It has shed 2,200 jobs since the start of 2004.
Standard Life is expected to unveil a surge in sales of self-invested personal pensions and investment mandates at its annual general meeting tomorrow. That is likely to have helped it maintain its market share.
MICHAEL ARNOLD'S CV
1971: Joined Milliman, the former insurance practice of Hymans Robertson.
1997-99: Vice-chairman of Institute of Actuaries.
1998: Reorganisation of non-profit and linked business of companies of Royal & Sun Alliance into two subsidiaries.
1998-99: Demutualisation of the South African Mutual Assurance Society (Old Mutual).
1999-2000: Demutualisation of Scottish Widows.
2000: Transfer of Axa Equity & Law Life Assurance Society to Axa Sun Life and reorganisation of long-term funds.
2000-02: Chairman of Association of Consulting Actuaries.
2001: Demutualisation of Friends Provident Life Office, Scottish Life, Scottish Provident and National Mutual Life Assurance Society. Appointed actuary to Equitable Life compromise scheme.
2003: Transfer of group life and income protection portfolio from Sun Life of Canada UK to Unum.