The need for capital has prompted Standard Life to move away from mutuality.
Standard says while its review has revealed a well-diversified portfolio of UK and international businesses, it will increasingly struggle for capital in the future and needs more access to capital from outside the company. The board intends to put a proposal for demutualisation to policyholders at its annual meeting in 2006.
With-profits policyholders who signed three-year waivers before March 31, 2004, will be able to have a share in any windfall. However, those buying policies after this date will not receive windfalls, nor will they be able to vote on the move.
The review update says that Standard intends to reposition its UK life and pension business to make it more profitable, with around 1,000 jobs to go by the end of this year as it moves to cut costs by 20 per cent.
It also intends to close its defined-benefit staff pension scheme to new entrants from November 16, 2004.
Standard has reaffirmed its commitment to IFAs, saying they will remain its core distribution channel but it adds that work has begun on developing relationships with other intermediaries and business partners.
Chief executive Sandy Crombie says: “To support our existing businesses and to realise the growth opportunities open to us as a diversified financial services group, we have concluded that we will require access to further external capital. While being a mutual has been a key part of Standard Life's success in the past, we now believe that raising further capital by way of demutualisation is likely to be in the best interests of the company and its policyholders.”