Business Comment: Terry Murden

Standard Life giving us something to chew on

David NishDavid Nish was a slow starter, the finance director promoted into the the CEO hot seat, and at first bamboozling his puzzled interrogators with a mouthful of management speak.

However, he has made his detractors eat their own words, re-engineering the company into what he described today as “a long term investment savings business”. It was a deliberately coined phrase to remind listeners to the morning conference call on the annual results that it has moved on.

In the last year alone two major transactions – the acquisition of Ignis Asset Management and the sale of its business in Canada – have rotated the Standard Life axis a little further away from its old life and pensions proposition towards being a money manager.

The figures have justified the move with the balance sheet strengthening and the sale of the historic Canadian business enabling a chunky payout to shareholders. That deal was a surprise, but at a time when changes closer to home are demanding a structural response it was too good to refuse.

Indeed, the pensions reforms that will come into effect in 30 days’ time, mark another major shift in the industry and one that will add another spoke in Standard Life’s wheel. As one analyst this morning says, the company is becoming a “vertically integrated provider operating in the advice, distribution and the fund management aspect of the value chain.”

If that too is a bit of a mouthful, it does at least pin down more precisely where the company sits in a life company sector comprising companies that are not easily comparable.

While Aviva, Legal & General and Just Retirement are more heavily exposed to a declining annuities market, Standard Life has cultivated other products, such as SIPPs. The loss of annuities business will hit its bottom line only marginally and building an advisory business will add further protection.

Being the leader in the income drawdown market positions Standard Life well for the proposed changes that take effect in April and, along with its peers, it cannot predict with any certainty how this will play out.

Today’s results were received well by the market, if not ecstatically, partly for reasons of unpredictability around the reforms, the tail off in annuities and also because of a net outflow of third party funds following the Ignis acquisition.

Analysts were broadly supportive with Panmure Gordon among the more bullish, setting 465p target for the shares.

A decade ago Standard Life was in danger of crumbing. All in all, the foundations today seem considerably stronger.

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