Final Results - Part 8 of 8

RNS Number : 7405X

Standard Life plc

24 February 2017

 

Standard Life plc

Full Year Results 2016

Part 8 of 8

12. Reports from the Committees of Standard Life Assurance Limited and the Standard Life Master Trust Co. Ltd.

12.1 Report from the With Profits Committee of Standard Life Assurance Limited

Whilst the management of its with profits business is the direct responsibility of the board of Standard Life Assurance Limited (SLAL), FCA regulations require that a with profits firm's governance arrangements should make provision for independent judgement and advice. The SLAL board has established a With Profits Committee (WPC) for this purpose.

Clifton Melvin,

Chairman, With Profits Committee of Standard Life Assurance Limited

Membership

All members of the WPC are independent of Standard Life. Their attendance at WPC meetings was:

Member	Attendance
Clifton Melvin, Chairman	10/10
Graham Aslet	10/10
Ross Ainslie1	10/10
Finula Cilliers2	9/9

¹    Ross Ainslie was appointed for a second term in June 2016.

²    Finula Cilliers was appointed as a member of the WPC in March 2016. 

The members are appointed by the SLAL board on the recommendation of the Nomination and Governance Committee.  Directors of the Standard Life plc and SLAL boards, the UK and Europe Chief Risk Officer and senior actuaries, in particular the With Profits Actuary and the UK and Europe Actuarial Director, routinely attend these meetings. 

SLAL has had a WPC since demutualisation. Its role is to monitor and advise the SLAL board on the management of with profits business, providing independent judgement on the fair treatment of with profits policyholders, and to take a proactive role in raising any issues that merit further consideration. The committee reviews all proposals that are material to the interests of SLAL's with profits policyholders. The committee has the authority to engage external advisers and has engaged Nick Dumbreck, an actuary from Milliman LLP, to routinely provide the members with advice. The Chairman has a right of access at all times to the Chairman of the Risk and Capital Committee but saw no requirement during the year to exercise this right.

The committee's routine formal interaction with the SLAL board is by the submission of the minutes of its meetings to the board, together with the provision of feedback on its advice, and by an annual report to the SLAL board in which it reviews the management of with profits business having regard to SLAL's duty to treat its with profits policyholders fairly and to meet their reasonable benefit expectations. The committee has authority to make a report to the with profits policyholders. It did not do so during 2016 and would not expect to do so unless it disagreed materially with SLAL's own annual report to its with profits policyholders (which is required by FCA regulations) on the management of the with profits business. Minutes of the committee meetings are also submitted to the Board of Standard Life plc and, in May 2016, the committee Chairman attended a meeting of the Standard Life plc Board which focused on three key with profits issues - investment strategy, the implementation of the new Solvency II insurance regulation regime and the terms on which the main with profits fund secures guaranteed annuities for customers.

The committee's work in 2016

An indicative breakdown as to how the committee spent its time is shown below: Diagram removed for the purposes of this announcement. However it can be viewed in full in the pdf document.

During 2016, the committee's work focused on these key areas:

Customer

Policy values - the WPC reviewed the algorithm for setting regular bonus rates and confirmed that it remains appropriate. It approved management's recommendations regarding bonus rates and payout values.

Service - the WPC regularly reviews with profits customer complaints data and has been pleased to note the continuation of an improving trend. The WPC visited the Customer Hub to understand how pensions freedoms are applied to the customer experience from a digital and telephony perspective. Following SLAL's decision to close the German With Profits Fund to new business in 2015 and subsequent restructuring to improve efficiency, the WPC has had detailed briefings on the management of the with profits business there, and in 2016, held one of its meetings in the branch office in Germany.  The committee has noted that the reduction in numbers of complaints has been especially pronounced in Germany.

Balance of interests

A fundamental responsibility of the WPC is to ensure that with profits customers' interests are protected, with appropriate balance between different cohorts of customers, and that shareholder interests do not compromise this protection.

The WPC approved the transfers to shareholder funds, in accordance with the Scheme of Demutualisation, for the year ended 31 December 2015 of some £190m.

The WPC also reviewed the With Profits Actuary's advice on expense allocation within SLAL and agreed with his conclusion that the methodology had no material bias against policyholders' interests. Occasionally there are administrative errors that give rise to extra costs and particular care is taken to ensure that the with profits funds do not bear any inappropriate burden from these.

The WPC approved SLAL's proposal that no changes were required to the rates of deduction from with profits policies in respect of the cost of guarantees.

Annuity Rates for Guaranteed Annuity Option/Guaranteed Minimum Pension Buyouts

Following the committee's review and challenge of the rates charged by SLAL to the Heritage With Profits Fund (HWPF) for buying out guaranteed annuity liabilities, SLAL is now offering a discounted rate to the HWPF on the basis that SLAL is not in a position to offer the HWPF the benefit of the open market option that is available to individual customers without taking on additional risk.  The committee is satisfied that the arrangement will help to protect the interests of the fund, but will continue to monitor the fairness of this arrangement.

Capital and risk management

During the year the WPC approved a number of proposals to manage the finances of the with profits funds and to control risks appropriately. These included revision of the scenarios for testing investment risk, adjusting Equity Backing Ratios and other allocations of the assets directly backing with profits policies, reviewing the effectiveness of hedging strategies, and setting distribution rates for the Inherited Estate The HWPF was set up at demutualisation with surplus referred to as an Inherited Estate. Its primary role is to provide a cushion against the possibility that the assets set aside to cover the liabilities of the HWPF prove insufficient and to meet any unforeseen liabilities.

Regulatory and governance

Principles and Practices of Financial Management (PPFM)

The WPC sought and obtained assurance that the with profits businesses in the UK have been managed in accordance with the published PPFM.

Solvency II

The introduction of Solvency II on 1 January 2016 has necessitated a number of technical changes to the Scheme of Demutualisation, to ensure that it continues to operate as intended, all of which were reviewed by the WPC. Some required Court approval, and this was obtained during 2016.

Investments

The WPC receives quarterly presentations from Standard Life Investments on the performance of the with profits funds. The committee noted recent slippage in the performance of some asset classes and challenged their performance. The committee also advised SLAL on the actions that are being taken to reverse this and maintain strong long-term performance.

Conclusion

Looking back on 2016, the WPC concluded that:

·   The management of SLAL's with profits business has paid due regard to its duty to treat its with profits policyholders fairly and to meet their reasonable benefit expectations

·   The UK Smoothed Managed With Profits Fund and the HWPF PPFMs have been complied with

·   It had continued to challenge management on the exercise of discretion

The committee provides information on its members, composition and how the committee protects the interests of policyholders and makes its views known at the following website www.standardlife.co.uk/c1/funds/with-profits-committee.page

12.2 Report from the Independent Governance Committee of Standard Life Assurance Limited

During 2016, the Independent Governance Committee (IGC) published their first annual report. The IGC acts solely in the interests of scheme members by providing credible and effective challenge on the value for money of workplace personal pension schemes.

Rene Poisson

Chairman, Independent Governance Committee of Standard Life Assurance Limited

In their first report, the IGC concluded that Standard Life does provide value for money for workplace schemes.

By way of reminder, Independent governance committees have been established as a response to:

·   The market review undertaken in 2013 by the Office of Fair Trading which identified that competition was not having the expected impact in improving value for policyholders in workplace pension schemes and that change was required to ensure that they received Value for Money

·   The results of a subsequent 2014 report (the legacy audit) by the Independent Project Board (IPB) of the Association of British Insurers which looked at legacy pension schemes at risk of being exposed to charges over an equivalent of one per cent annual management charge

Membership

The members are appointed by the SLAL board on the recommendation of the Nomination and Governance Committee. The membership of the IGC remains unchanged since inception.

The IGC intends to meet as often as necessary to fulfil its obligations. During 2016, as the IGC fulfilled the commitments they outlined in their first report, the committee has met 12 times. 

Member attendance at meetings for the year ending 31 December 2016 was:

IGC Member	Attendance
Rene Poisson, Chairman	12/12
Richard Butcher	11/12
Ingrid Kirby	12/12
Roger Mattingly	12/12
Michael Craig (non-independent member)	12/12

The Head of Pensions Strategy routinely attends these meetings and the Managing Director for Corporate, Retail and Wholesale has had regular interactions with the committee. The committee's routine formal interaction with the SLAL board is by the minutes of its meetings.  The directors of SLAL and of the Company have an open invitation to attend any of the committee meetings.  Minutes of the committee meetings are submitted to the Board. In May 2016, the committee chairman attended a meeting of the Standard Life plc Board to present the findings from the IGC's first report.

The Chairman is responsible for the production of an annual report, the first of which was published on 29 March 2016. The report and information on the committee's composition can be found at the following website www.standardlife.co.uk/igc

The committee's work in 2016

An indicative breakdown as to how the committee spent its time is shown below: Diagram removed for the purposes of this announcement. However it can be viewed in full in the pdf document.

Legacy audit

The IGC has focused on the implementation of the changes agreed under the legacy audit which were successfully implemented on 31 October 2016 as per the deadline agreed between the IGC and SLAL.  

Value for money

In its first annual report the IGC concluded overall that Standard Life's various workplace personal pension products (both newer and older style) offer policyholders value for money; are of good quality; benefit from well-designed investment solutions, good administration and governance; and, comprehensive member support and communication materials. However, it noted that to achieve a suitable level of income in retirement, adequate contributions are required through the lifetime of pension saving. 

Looking ahead to 2017

The IGC is looking more closely at the value for money offered by the wider range of investment options as well as default arrangements that have been designed by employer sponsors and/or scheme advisers. It has commissioned some independent analysis to help with this work.

The IGC recognises the importance of gathering the views of scheme members as customers and has continued to attend retirement roadshows. One of Standard Life's commitments to the IGC referenced in the 2016 report was to commission member research.  Standard Life, along with ten other providers, sponsored and participated in independent research co-ordinated by Sacker & Partners LLP. This approach allowed insight to be gathered from scheme members to build an understanding of what they value and why. The results of this will be shown in the second annual report due to be published in March 2017.

The annual report can be found at the following website www.standardlife.co.uk/igc

12.3 Report from the Standard Life Master Trust Co. Ltd

During 2015, Standard Life Master Trust Co. Ltd (SLMTC) was established as a subsidiary of SLAL.  Its role is to act as trustee and to work in the interests of members of the Standard Life Defined Contribution Master Trust and Stanplan A pension schemes, both of which are trust based schemes designed for multiple employers.

Similar to the IGC, SLMTC has a duty to assess whether members of these schemes are receiving good value. Alongside their trustee duties they are following a similar programme to the IGC to carry out this assessment.

Richard Butcher

Chairman, Standard Life Master Trust Co. Ltd

Membership

The board of SLMTC consists of five members, all of whom are independent of Standard Life. They meet regularly throughout the year. Pitmans Trustees Limited was appointed as chair of the board of directors of the SLMTC. Richard Butcher is their representative.

The membership of the board remains unchanged since inception.

The SLMTC board intends to meet at least four times a year and as often as necessary to fulfil its obligations. During its second year the board of SLMTC has met six times. 

Member attendance at meetings for the year ending 31 December 2016 was:

Member	Attendance
Richard Butcher, Chairman	6/6
Rene Poisson	6/6
Stella Girvin	6/6
Ruston Smith	6/6
Francois Barker	6/6

The Head of Pensions Strategy routinely attends these meetings and the Managing Director for Corporate, Retail and Wholesale has had regular interactions with the board.

The board's work in 2016

An indicative breakdown as to how the board spent its time is shown below: Diagram removed for the purposes of this announcement. However it can be viewed in full in the pdf document.

Legacy audit

Alongside the IGC, the SLMTC has focused on the implementation of the changes agreed under the legacy audit which were successfully implemented on 31 October 2016 as per the deadline agreed between the SLMTC board and SLAL.  

Good value

In the first chairman's statement published in July 2016, it was concluded that Standard Life's Defined Contribution and Stanplan A Master Trusts offer good value.

Audit and assurance framework

In 2016, the board of SLMTC adopted the framework provided by the Audit and Assurance faculty of the Institute of Chartered Accountants in England and Wales entitled Assurance Reporting on Master Trusts (Master Trust Supplement to ICAEW AAF 02/07).  This report provides information and assurance on the design and description of governance and administrative control procedures in relation to the business operations of SLMTC for providing pensions trustee services.

Looking ahead to 2017

A key focus for the board is the impact of the Pension Schemes Bill and the changes to come in the months ahead.

More information on the composition of SLMTC can be found at the following website www.standardlife.co.uk/c1/master-trust-committee.page

13. Glossary

Annuity

A periodic payment made for an agreed period of time (usually up to the death of the recipient) in return for a cash sum. The cash sum can be paid as one amount or as a series of premiums. If the annuity commences immediately after the payment of the sum, it is called an immediate annuity. If it commences at some future date, it is called a deferred annuity.

Articles

The Articles of Association detail the provisions relating to the regulation of a company in terms of the rights of its members and the authority of its directors.

Assets under administration (AUA)

AUA is a measure of the total assets we administer. It includes Standard Life Investments assets under management (AUM), as well as those assets that the Group administers where the customer has made a choice to select an external third party investment manager.

AUA represents the IFRS gross assets of the Group, adjusted to include third party AUA which is not included on the consolidated statement of financial position, and excluding certain assets which do not constitute AUA. The assets excluded are primarily reinsurance assets, deferred acquisition costs and intangible assets.

Assets under management (AUM)

A measure of the total assets that Standard Life Investments manages on behalf of individual customers and institutional clients, for which it receives a fee.

Auto enrolment

The UK Government introduced auto enrolment to help people save for their retirement. Employers have to automatically enrol eligible employees into a qualifying workplace pension scheme (QWPS). This pension scheme needs to meet the standards set by the Pensions Regulator.

Board

The Board of Directors of the Company.

Capital management

Capital management is a component of operating profit and relates to the return from the net assets of the shareholder business, net of costs of financing. This includes the net assets in defined benefit staff pension plans and net assets relating to the financing of subordinated liabilities. The measure excludes short-term fluctuations in investment return.

Capital surplus

This is a regulatory measure of our financial strength. From 1 January 2016 our capital surplus is measured on a Solvency II basis. Prior to
1 January 2016, our capital surplus was measured in accordance with the Insurance Groups Directive.

Chief Operating Decision Maker

The strategic executive committee.

Company

Standard Life plc.

Cost/income ratio

This is an efficiency measure that is calculated as operating expenses divided by operating income on a rolling 12 month basis, and includes the share of associates' and joint ventures' profit before tax.

Deferred acquisition costs (DAC)

The method of accounting whereby acquisition costs on long-term business are deferred on the consolidated statement of financial position as an asset and amortised over the life of those contracts. This leads to a smoothed recognition of up front expenses instead of the full cost in the year of sale.

Deferred income reserve (DIR)

The method of accounting whereby front end fees that relate to services to be provided in future periods are deferred on the consolidated statement of financial position as a liability and amortised over the life of those contracts. This leads to a smoothed recognition of up front income instead of the full income in the year of sale.

Director

A director of the Company.

Discounting

The reduction to present value at a given date of a future cash transaction at an assumed rate, using a discount factor reflecting the time value of money. The choice of a discount rate will usually greatly influence the value of insurance provisions, and may give indications on the conservatism of provisioning methods.

Drawdown (flexible income)

Drawdown, also known as flexible income, allows the policyholder to withdraw pension income as and when they request it. The remainder of the pension fund remains invested, giving it the potential for growth.

Earnings before interest, tax, depreciation and amortisation (EBITDA)

EBITDA is defined as earnings before interest, taxation, depreciation, amortisation, restructuring costs, other non-operating items and
non-controlling interests.

Earnings per share (EPS)

EPS is a commonly used financial metric which can be used to measure the profitability and strength of a company over time. EPS is calculated by dividing profit by the number of ordinary shares. Basic EPS uses the weighted average number of ordinary shares outstanding during the year. Diluted EPS adjusts the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, such as share options awarded to employees.

EBITDA margin

This is an industry measure of performance for investment management companies. It is calculated as EBITDA divided by fee based revenue.

Effective tax rate

Tax expense/(credit) attributable to equity holders' profit divided by profit before tax attributable to equity holders' profits expressed as a percentage.

Fair value through profit or loss (FVTPL)

FVTPL is an IFRS measurement basis permitted for assets and liabilities which meet certain criteria. Gains or losses on assets or liabilities measured at FVTPL are recognised directly in the income statement.

Fee based business/revenue

Fee based business is a component of operating profit and is made up of products where we generate revenue primarily from asset management charges (AMCs), premium based charges and transactional charges. AMCs are earned on products such as SIPP, corporate pensions and mutual funds, and are calculated as a percentage fee based on the assets held. Investment risk on these products rests principally with the customer, with our major indirect exposure to rising or falling markets coming from higher or lower AMCs.

Fee revenue yield (bps)

The average revenue yield on fee based business is a measure that illustrates the average margin being earned on the assets that we administer. It is calculated as a rolling 12 month fee based revenue divided by a rolling 12 month monthly average AUA.

Global absolute return strategies (GARS)

A discretionary multi-asset fund provided under several regulated pooled and segregated structures globally by Standard Life Investments. The investment objective is to target a level of return over a rolling 3 year period equivalent to cash plus 5% a year (gross of fees), and to do so with as little risk as possible.

Group, Standard Life Group or Standard Life

Prior to demutualisation on 10 July 2006, SLAC and its subsidiaries and, from demutualisation on 10 July 2006, the Company and its subsidiaries.

Growth channels

We aim to drive the increase in our assets, revenue and profit via our growth channels. This comprises Standard Life Investments Institutional and Wholesale, UK Workplace and Retail, Europe (excluding Germany with profits), Hong Kong, Standard Life Wealth and Ignis.

Heritage With Profits Fund (HWPF)

The Heritage With Profits Fund contains all business - both with profits and non-profit - written before demutualisation in the UK, Irish or German branches, with the exception of the classes of business which the Scheme of Demutualisation allocated to funds outside the HWPF. The HWPF also contains increments to this business.

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards are accounting standards issued by the International Accounting Standards Board (IASB). The Group's consolidated financial statements are prepared in accordance with IFRS as endorsed by the EU.

Investor view

The investor view of Solvency II adjusts the regulatory position for the impact from unrecognised capital and with profit funds / defined benefit pension plans.

Key performance indicators (KPI)

A measure by reference to which the development, performance or position of the business can be measured effectively.

Liability aware

Liability aware is a framework for proactively managing the various liability risks and requirements that are faced by defined benefit pension plans and insurance companies.

Mature book/business

Mature books are expected to provide a stable and consistent contribution to our profit. This includes UK mature Retail, Standard Life Investments Strategic Partner Life books and spread/risk based business. It also includes the with profits business in Germany which closed to new business in April 2015.

Net flows

Net flows represent gross inflows less gross outflows or redemptions. Gross inflows are new funds from clients and customers. Gross outflows or redemptions is the money withdrawn by clients or customers during the period, including annuity payments.

Operating expenses

Operating expenses is a component of operating profit and relates to the day-to-day expenses of managing our business.

Operating income

Operating income is a component of operating profit and consists of fee based revenue and spread/risk margin.

Operating profit

Operating profit is the Group's key alternative performance measure. Operating profit excludes impacts arising from short-term fluctuations in investment return and economic assumption changes. It is calculated based on expected returns on investments backing equity holder funds, with consistent allowance for the corresponding expected movements in equity holder liabilities. Impacts arising from the difference between the expected return and actual return on investments, and the corresponding impact on equity holder liabilities except where they are directly related to a significant management action, are excluded from operating profit and are presented within profit before tax. The impact of certain changes in economic assumptions is also excluded from operating profit and is presented within profit before tax.

Operating profit also excludes the impact of the following items:

·  Restructuring costs and corporate transaction expenses. Restructuring includes the impact of major regulatory change.

·  Impairment of intangible assets acquired in business combinations

·  Profit or loss arising on the disposal of a subsidiary, joint venture or associate

·  Amortisation of intangibles acquired in business combinations and fair value movements in contingent consideration

·  Items which are one-off in nature and which, due to their size or nature, are not indicative of the long-term operating performance of the business

Operating return on equity (RoE)

The annualised post-tax operating profit expressed as a percentage of the opening IFRS equity, adjusted for time apportioned dividends paid to equity holders.

Own funds

Under Solvency II, the capital resources available to meet solvency capital requirements are called own funds.

Platform

An investment platform (eg Wrap or Elevate) which is essentially a trading platform enabling investment funds, pensions, direct equity holdings and some life assurance contracts to be held in the same administrative account rather than as separate holdings.

Recourse cash flows (RCF)

Certain cash flows arising in the Heritage With Profits Fund (HWPF) on specified blocks of UK and Ireland business, which are transferred out of the fund annually and accrue to the ultimate benefit of equity holders, as determined by the Scheme of Demutualisation.

Regular premium

A regular premium contract (as opposed to a single premium contract), is one where the policyholder agrees at inception to make regular payments throughout the term of the contract.

Scheme of Demutualisation or the Scheme

The scheme pursuant to Part VII of, and Schedule 12 to, the Financial Services and Markets Act 2000, under which substantially all of the long-term business of SLAC was transferred to Standard Life Assurance Limited on 10 July 2006.

SICAV

A SICAV (société d'investissement à capital variable) is an open-ended collective investment scheme common in Western Europe. SICAVs can be cross-border marketed in the EU under the Undertakings for Collective Investment in Transferable Securities (UCITS) directive.

Single premium

A single premium contract (as opposed to a regular premium contract), which involves the payment of one premium at inception with no obligation for the policyholder to make subsequent additional payments.

SIPP

A self invested personal pension which provides the policyholder with greater choice and flexibility as to the range of investments made, how those investments are managed, the administration of those assets and how retirement benefits are taken.

SLAC

The Standard Life Assurance Company (renamed The Standard Life Assurance Company 2006 on 10 July 2006).

SLAL

Standard Life Assurance Limited.

Solvency II

Solvency II is an EU-wide initiative that brings consistency to how EU insurers manage capital and risk. Solvency II was implemented on
1 January 2016.

Solvency capital requirement (SCR)

Under Solvency II, insurers are required to identify their key risks - for example that equity markets fall - and hold sufficient capital to withstand adverse outcomes from those risks. This amount of capital is referred to as the Solvency capital requirement or SCR.

Spread/risk business

Spread/risk business mainly comprises products where we provide a guaranteed level of income for our customers in return for an investment, for example, annuities. The 'spread' referred to in the title primarily relates to the difference between the guaranteed amount we pay to customers and the actual return on the assets over the period of the contract.

Spread/risk margin

Spread/risk margin is a component of operating profit and reflects the margin earned on spread/risk business. This includes net earned premiums, claims and benefits paid, net investment return using long-term assumptions and reserving changes. Spread/risk margin excludes the impact of economic assumption changes, which are not included in determining operating profit.

Standard Life Investments Institutional

Standard Life Investments Institutional sell to institutions (including corporates, pension schemes, local authorities, government agencies and insurance companies) either directly or through intermediaries.

Standard Life Investments Wholesale

Standard Life Investments Wholesale sell retail products through wholesale distributors including third party fund supermarkets, global financial institutions and private banks.

Strategic executive committee

Responsible for the day-to-day running of the business and comprises; Chief Executive, Chief Executive - Life Insurance, Chief Executive - Pensions and Savings, Chief Financial Officer, Chief Investment Officer, Chief Operating Officer, Chief People Officer, Chief Risk Officer, General Counsel and the Global Client Director.

Strategic partner life business

A measure of the assets that Standard Life Investments manages on behalf of Standard Life Group companies and under other long-term life book partnership agreements with third party companies such as Phoenix Group.

Subordinated liabilities

Subordinated liabilities are debts of a company which, in the event of liquidation, rank below its other debts but above share capital.

Technical provisions

The best estimate market consistent value of our policyholder liabilities is referred to as technical provisions. The calculation is discounted to recognise the time value of money and includes a risk margin, calculated in accordance with Solvency II regulations.

Third party (excluding strategic partner life business)

A measure of the assets that Standard Life Investments manages on behalf of individual customers and institutional clients, for which it receives a fee. This measure excludes the assets that are managed on behalf of strategic partners in life assurance books.

Transitional relief

Solvency II regulations allow insurers to smooth the introduction of new rules for calculating policyholder liabilities. This relief includes a deduction from the amount of Solvency II technical provisions, based on the difference between technical provisions under the previous regulatory framework and Solvency II. The deduction decreases over the course of 16 years from 1 January 2016.

UK Retail

This relates to business where we have a relationship with the customer either directly or through an independent financial adviser. We analyse this type of business into growth and mature categories. Retail growth includes the products, platforms, investment solutions and services of our UK Retail business that we continue to market actively to our customers. Retail mature includes business that was predominantly written before demutualisation.

UK Workplace

UK Workplace pensions, savings and benefits to UK employers and employees. These are sold through corporate benefit consultants, independent financial advisers, or directly to employers.

Underlying cash generation

This presents a shareholder view of underlying cash earnings. The IFRS consolidated statement of cash flows includes policyholder cashflows, and does not exclude underlying adjustments and non-operating items.

Underlying cash generation adjusts underlying performance for certain non-cash items. Adjustments are made for deferred acquisition costs/deferred income reserve, fixed/intangible assets and the Asian joint ventures and associates. Depreciation/amortisation that would normally be included in operating profit is replaced with the cash movement in the period. The measure is stated net of current (cash) tax on underlying performance. A reconciliation of underlying performance to underlying cash generation is included in the Strategic report. Reconciliations between underlying performance, operating profit and profitability on an IFRS basis are also included in this report.

Underlying performance

Underlying performance is operating profit before tax after excluding the impact of spread/risk operating actuarial assumption changes and specific management actions in the reporting period.

Unit linked policy

A policy where the benefits are determined by reference to the investment performance of a specified pool of assets referred to as the unit linked fund.

14. Shareholder information

Registered office

Standard Life House
30 Lothian Road
Edinburgh
EH1 2DH
Scotland

Company registration number: SC286832

Phone: [phone]* or 0131 225 2552*

For shareholder services call:

0345 113 0045*

*  Calls may be monitored and/or recorded to protect both you and us and help with our training. Call charges will vary.

Secretary

Kenneth A Gilmour

Registrar

Capita Registrars Limited

Auditors

PricewaterhouseCoopers LLP

Solicitors

Slaughter and May

Brokers

JP Morgan Cazenove

Goldman Sachs

Shareholder services

We offer a wide range of shareholder services. For more information, please:

·   Contact our registrar, Capita, on 0345 113 0045* if calling from the UK. International numbers can be found on the next page.

·   Visit our share portal at www.standardlifeshareportal.com

Sign up for Ecommunications

Signing up means:

·   You'll receive an email when documents like the Annual report and accounts, Half year results and AGM guide are available on our website

·   Voting instructions for the Annual General Meeting will be sent to you electronically

Set up a share portal account

Having a share portal account means you can:

·   Manage your account at a time that suits you

·   Download your documents when you need them

To find out how to sign up, visit www.standardlifeshareportal.com

Preventing unsolicited mail

By law, the Company has to make certain details from its share register publicly available. Because of this, it is possible that some registered shareholders could receive unsolicited mail or phone calls. You could also be targeted by fraudulent 'investment specialists'. Remember, if it sounds too good to be true, it probably is.

You can find more information about share scams at the Financial Conduct Authority website www.fca.org.uk/consumers/scams

If you are a certificated shareholder, your name and address may appear on a public register. Using a nominee company to hold your shares can help protect your privacy. You can transfer your shares into the Company-sponsored nominee - the Standard Life Share Account - by contacting Capita, or you could get in touch with your broker to find out about their nominee services.

If you want to limit the amount of unsolicited mail you receive generally, please visit www.mpsonline.org.uk

2017 Financial calendar

Full year results 2016	24 February
Ex-dividend date for 2016 final dividend	13 April
Record date for 2016 final dividend	18 April
Last date for DRIP elections for 2016 final dividend	03 May
Annual General Meeting	16 May
Dividend payment date for 2016 final dividend	23 May
Half year results 2017	08 August
Ex-dividend date for 2017 interim dividend	07 September
Record date for 2017 interim dividend	08 September
Last date for DRIP elections for 2017 interim dividend	27 September
Dividend payment date for 2017 interim dividend	18 October

Analysis of registered shareholdings at 31 December 2016

Range of shares	Number of holders	% of total holders	Number of shares	% of total shares
1-1,000	63,383	61.57	27,054,291	1.37
1,001-5,000	34,672	33.68	70,479,180	3.56
5,001-10,000	2,898	2.82	19,440,771	0.98
10,001-100,000	1,528	1.48	35,141,061	1.78
#100,001+	461	0.45	1,826,769,134	92.31
Total	102,942	100	1,978,884,437	100

# These figures include the Company-sponsored nominee - the Standard Life Share Account - which had 1,060,964 participants holding 746,304,323 shares.

 

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