Standard Life remains bullish about its financial status, claiming its current capital position is stronger than in 2002 and likely to improve this year.
It says its fund for future appropriations – the capital left after liabilities and margin for prudence are subtracted from assets – rose to £4.5bn in the year to November 2003, up from £3.2bn in 2002. Over the same period, its available assets – the capital needed to cover the FSA's minimum margin requirement – also grew to £4.6bn from £4.2bn.
Marketing director Mike Leahy says once Standard raises £750m of hybrid capital – mutual companies' equivalent of a bond issue – its financial position will be stronger, with its minimum margin cover rising from 215 per cent to 250 per cent.
But due to the changes in the way capital must be projected, he says Standard's implicit item waiver – often referred to as future profits – will be reduced from £1.75bn to £1bn, “reflecting the new realistic balance sheet”. Previously it had often used an implicit item of £1.5bn.
Further details on Standard's financial position will be available when it releases its full results for the year to November 2003 on February 18.
Leahy says: “Our capital position is stronger than the previous year and next year it will be even stronger once we have completed the capital-raising exercise.”