Standard Life is almost certain to demutualise but there will not be a windfall bonanza for policyholders, according to leading insurance analyst Ned Cazalet.
Cazalet says the life office will need to float at about £3-4bn, assuming there has already been a much-needed substantial capital injection. But as Standard is demutualising out of necessity he says there are unlikely to be cash windfalls to policyholders, especially those in its “effectively closed” £30bn with-profits fund. Cazalet does not know how much Standard would raise were it to float - an event he says may not take place until late 2005 - but he believes it will be a fraction of £16bn he calculated it would be worth in 2000. But he says the biggest challenges facing the management will be to repair the damage to its brand and to find ways to write new business.
He says: “We will be seeing with-profits returns being cut, the equity weighting being cut and trading further down the scale. It will be a real job by the management to stop it sliding further, that cock-up factor. How can it limit the damage? That will be the real test.”