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Standard Life sees increase in pension lapses

Standard Life saw an increase in pensions lapses due to customers consolidating pension arrangements following A-Day in the first half of 2006.

The company has set up a pre-tax provision of 79m to cover expected lapses.

The interim results are the first that reveal profitability to be released by the provider and show a growth in UK life and pensions business of 78m on an EEV basis.

Standard Life announced an operating profit of 206m on a European Embedded Value basis following the life offices demutualisation in July.

The provider attributes this growth to the impact of A-Day, changes in product mix and focus on customer service.

The Present Value of New Business Premium for UK life and pensions business totalled 4,330m in the first six months of 2006 and the company said strong Sipp and investment bond sales contributed to this performance.

Group chief executive Sandy Crombie says: Our financial results for the first half of the year show strong sales growth and improved new business profitability. New business contribution of 91m, almost three times the value for the whole of 2005, reflects the continued success of our strategy of concentrating on higher margin products which require lower capital investment.

We have been net winners from the heightened activity in the UK pensions market. However, we have seen in recent weeks an increase in lapses and have deemed it prudent to set aside a provision until lapse levels return to normal.

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