Standard Life bucks market trend to record steep profits rise

The Edinburgh-based firm's improvement to 534 million came after worldwide life and pensions new business sales rose 5% to 9.1 billion in the first six months of the year, with the figure in the UK "constant" at 7.2 billion in a challenging market.

New business profits generated by the UK life and pensions operation increased by 4% to 138 million, the firm added.

Life and pension sales saw the impact of the change in pension rules in 2006 begin to drop-out, with the spike in sales seen after "A-Day" now on the wane.

First half individual sales of DIY pensions known as self-invested personal pensions (SIPPs) – highly popular after A-Day widened the scope of allowable investments – were down 19% to 2.1 billion.

But the company stuck by its expectation that the UK SIPP market will double in size to 100 billion of assets by 2011, adding that it planned several changes to its SIPPs product in the second half of 2008.

Group pension sales of 1.8 billion increased by 17% compared to a strong period a year earlier, reflecting a further sign of the shift towards group personal pension schemes and thanks also to a large scheme win.

Standard Life added that sales across its savings and investments portfolio increased by 19% to 1.6 billion, due to continued strong offshore bond sales, which have more than tripled compared to a year earlier.

Recent changes to the capital gains tax regime has so far had a "mixed impact" on the portfolio, it added.

In mortgages, Standard said its book stood at 10.6 billion at the end of June, a fall of 700 million on December but with a low arrears rate of 0.24%.

Chief executive Sandy Crombie described the company's first half trading as "successful" and said a 7% increase in its dividend reflected "our confidence about the future".