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£4bn in surplus cash underpins solid solvency

Standard Life has calmed fears over its solvency margin by revealing it has more than £4bn in surplus capital.

The company has sold £750bn worth of equities since the start of the year, as shown in its annual results for 2003, released last week.

They show the company has “realistic” surplus capital of more than £4bn, twice the risk capital margin, with available assets on a statutory basis up by 9.5 per cent to £4.6bn in 2003 from £4.2bn in 2002.

Commerzbank insurance analyst Roman Cizdyn says this position is better than expected and compares well with rival companies.

But Standard&#39s UK life and pension business dropped by 27 per cent last year to £956m APE from £1.3bn in 2002.

The firm&#39s three subsidiaries posted strong results, with Standard Life Bank recording its first profit, with a surplus of £4.6m and Standard Life Investments showing an increase in funds under management of more than 15 per cent, rising to £86.5bn from around £75.2bn. Standard Life Healthcare saw a 25 per cent increase in sales, with annual premium income up by 12 per cent to £194m from £173m.

Standard says it is unlikely to raise the £750m hybrid capital it plans to use for future growth before the second quarter of this year.

Cizdyn says: “The finances of Standard Life seem healthier than a lot of people had expected. A realistic surplus of £4.6bn compares well with their rivals and the bank and healthcare channels are both performing well.”

Standard chief executive Sandy Crombie says: “We remain cautiously optimistic and expect that the improving outlook for stock markets generally, should lead to increased confidence among retail savers this year.”

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