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Standard Life profits up 6 per cent to £933m

Standard Life has posted pre-tax operating profits of £933m for the full year, up 6 per cent from £881m.

The operating profits are calculated on a European Embedded Value basis, but on an International Financial Reporting Standards Basis the post-tax profits were down 78 per cent from £465m in 2007 to £100m in 2008.

The EEV profits include a £100m provision for payments to customers of the pension sterling fund.

The insurer has already met its target for £100m of efficiency savings and set a further target of £75m of additional savings.

It says it hopes that some staff whose jobs are cut as part of its strategic review of distribution may be redeployed to work on its wrap, which it says doubled the number of accounts it manages over the past year and saw strong growth in assets.

Standard Life also said it would be launching a new product this year that will be “cash efficient” is expected to generate strong interest from IFAs.

The insurer remained tight-lipped as to what type of product it is planning to launch.

Standard Life’s surplus capital was down from £3.4bn in 2007 to £3.3bn at the end of 2008, after allowing for an increased dividend payment of 11.77p.

In the UK, EEV operating profits were up 8 per cent from £606m to £657m, but on an IFRS basis UK life and pensions profit before tax fell by 53 per cent to £184m, from £395m in 2007.

New business profitability for individual pensions, Sipps and increments on existing policies, also fell 54 per cent to £56m, from £123m last year.

Group pensions new business dropped from £60m in 2007 to £55m this year, a 3 per cent decline.

Annuities new business was up 14.8 per cent from £54m in 2007 to £74m this year.

Wrap customers more than doubled from 8,100 in 2007 to 16,900 at the same period this year.

Total funds on the platform were up from £1.1bn in 2007 to £1.8bn this year.

Standard Life group chief executive Sir Sandy Crombie says despite a backdrop of challenging economic conditions the group has delivered a solid performance in 2008.

He says: “We have announced good profits, healthy capital and cash generation, and have achieved efficiency improvements a year ahead of
target. Our capital position is among the strongest in the industry and is relatively resilient in the event of further deterioration in
market conditions.

“Whilst we are pleased with this performance, our culture of continuous improvement is underlined by the next phase of efficiency savings we have set for the business today.”

Crombie has a further £75m of annual savings planned by the end of 2010.

He says: “With the outlook for world financial markets remaining difficult, we will continue to follow our proven conservative strategy, with a focus on driving efficiencies while pursuing growth to an extent consistent with the prevailing conditions and our limited appetite for
capital exposure.”

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