Standard Life tops forecasts with jump in new business

BUOYANT stock market conditions and sweeping regulatory changes in the pension industry have helped Standard Life deliver a forecast-beating rise in sales.

Standard Life have delivered a forecast-beating rise in sales. Picture: Phil Wilkinson

The group said the introduction of new “auto-enrolment” rules, which force companies to provide pension schemes for their staff, helped push first-quarter new business up 24 per cent to £6.3 billion, well above the £5.4bn forecast by analysts.

Assets under administration grew 7 per cent to a record £233.1bn as net flows of client money more than doubled to £2.8bn, and chief executive David Nish said the group had seen an increase in UK institutional pension demand and higher corporate pensions sales in Canada.

Shares in the Edinburgh-based firm leapt 8 per cent to 380.7p, giving it a market value of £9bn.

Auto-enrolment led to 42,000 additional employees joining pension schemes run by Standard Life in the first three months of the year, and the firm estimates it could win as many as 400,000 extra scheme members.

Finance director Jackie Hunt said the group’s fund management arm, Standard Life Investments (SLI), saw its third-party net inflows more than double to £3bn, of which about £600 million came from the US.

SLI signed up to a distribution agreement with US financial service firm John Hancock last year, and Hunt said this had led to “significant interest” from institutional investors, including a recent deal to manage $500m (£328m) for the California Public Employees’ Retirement System (Calpers), the largest public pension fund in the US.

She added: “Something like 43 per cent of flows are now coming from outside the UK, and we’ve seen very strong growth in our US business in particular.

“The SLI brand name was always strong in the UK and has grown in Europe, and now it’s growing significantly in the US. A lot of our momentum is being driven by the geographic widening of our base.”

Standard Life has also gained from this year’s implementation of the retail distribution review (RDR), which banned commission payments to advisers, even though it has not paid commission since its flotation in 2006.

Hunt said the shake-up meant that advisers who had previously operated on a commission-only basis were now showing an interest in Standard Life’s products. JP Morgan Cazenove analyst Ashik Musaddi said the group was in talks with about 200 firms of advisers that have had no contact with it for several years.

Musaddi said: “Following the banning of commissions in the UK, Standard Life is getting traction from the adviser firms that were using commission-paying insurers earlier.

“This, in our view, reflects a potential upside in terms of securing distribution which eventually would lead to higher inflows in individual pensions.”

Hunt said the group was considering internal candidates “and possibly some external ones” to replace Ronnie Taylor, who surprised the industry earlier this month by resigning as Standard Life’s head of corporate pensions to become pensions and investments director at Lloyds Banking Group.