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Standard Life admitted today the pensions and life insurance market is “pretty horrible” but set itself up as the stand-out company in the sector by increasing its dividend.
The Scottish financial services giant reported an underlying half-year operating profit down 35% at £348 million, a reported pre-tax loss of £20 million, new life and pension sales down by nearly a fifth and assets under administration falling to £156.5 billion.
But there was good news for Standard Life shareholders, hundreds of thousands of them policyholders who were gifted stock in the firm's demutualisation three years ago. With much of the rest of the insurance and pensions sector cutting dividends, Standard Life's outgoing chief executive Sir Sandy Crombie, probably overseeing his last half-year results, reported a 2% lift in the interim dividend to 4.15p.
“The increase in the dividend is not just for show. it illustrates our confidence in the resilience of our business model,” said Crombie, pointing to cash generation in the six months up 16% to £167 million.
Quizzed on whether the rising dividend is sustainable, he said: “We have done it because it is the right thing to do. We would not do this unless we are confident we would be able to follow through on it.”
But Crombie warned the savings market is not a happy place. “It's been pretty horrible and there are concerns things could get worse,” he said.
Standard Life has announced it is looking for a successor for the veteran Crombie but there was no news of a change at the top, a state of affairs which some analysts believe is creating a vacuum and holding back decisions on whether the firm will lead industry consolidation and launch a major takeover.
Crombie today refused to say how far the board has gone in identifying a new chief executive, whom some insiders believe will be announced as finance director David Nish.
Of potential takeovers in the sector Crombie said: “We are going for organic growth. Standard Life is a different business model [to others in the sector] and we are not interested in old business models.”
* Struggling insurer Old Mutual posted an 81% plunge in profits as it picked Patrick O'Sullivan as its chairman. Pre-tax profits for the first six months of the year dived to £160 million from £853 million in the same period in 2008 as it abandoned its interim dividend. O'Sullivan, who succeeds Chris Collins when he retires at the end of the year, was previously vice chairman of Zurich Financial Services.
