Interim Management Statement

RNS Number : 9995G
Standard Life plc
30 October 2008
 



Standard Life plc

Interim Management Statement - nine months to 30 September 2008

30 October 2008


Strong net flows in testing market conditions

  • Worldwide life and pensions net inflows of £2.3bn1 (2007: £2.4bn)
  • Worldwide third party net investment inflows, excluding money market funds, of £3.2bn (2007: £4.8bn)


New business sales demonstrate robust business model 

  • Worldwide life and pensions sales marginally higher at £12.4bn (2007: £12.3bn)


Balance sheet resilient

  • FGD surplus of £3.4bn at 30 September 2008 (30 June 2008: £3.5bn)
  • A further 40% fall in equity markets from 30 September 2008 would result in an FGD surplus of £1.9bn

Group Chief Executive Sandy Crombie said: 


'I am pleased to report that Standard Life has produced a solid performance in the first nine months of 2008, despite the market turbulence. The conservative investment management policies we have adopted over the past few years have resulted in a balance sheet that is both strong and resilient. 


'While markets are volatile and may remain that way for some time, we are well positioned to continue to attract institutional and retail assets due to our innovative product set, excellence in customer service and strong distribution relationships.' 



Unless otherwise stated, all sales figures are on a PVNBP basis and all comparisons are in sterling and with the nine months ending 30 September 2007.


Strong net flows in testing market conditions

Total net flows across our Worldwide life and pensions operations1 were only 2% lower at £2.3bn, the strong growth in our international operations offsetting the continued difficult market conditions in the UK.


UK life and pensions net flows were 15% lower at £1.7bn. Within this total, net Pensions flows excluding volatile Institutional TIP flows were 2% lower at £1.3bn (2007: £1.4bn), reflecting reduced transfer values. In Savings and investments there was a net outflow of £243m (2007: net outflow of £99m) due to lower Investment bond sales that were affected by market uncertainty and recent CGT changes. Against this, we have seen continued strong growth in Offshore bond net inflows. Claims levels across our pensions and with profits portfolios continue to trend downwards and are within long-term assumptions. Claims levels of unit-linked bonds remain consistent with the short-term lapse provision set up at the 2007 year-end.


In Europe, net flows strengthened by 7% to £351m, due to higher German net inflows from regular premium business. Canadian net flows of £292m have increased by 371%, reflecting higher inflows across Group savings and retirement products, which exceeded scheduled annuity payments.


Standard Life Investments has performed well during the period despite the economic uncertainty, with worldwide third party investment net inflows of £1.7bn (2007: £6.1bn). Excluding volatile flows into our money market funds, inflows were £3.2bn (2007: £4.8bn).  


New business sales demonstrate robust business model

UK Financial Services

UK life and pensions sales of £9.8bn were 5% lower in the first nine months of 2008, driven by a 6% decrease in pension sales against a strong prior year comparator. Due to normal seasonality across our key product lines, the third quarter is traditionally the weakest of the year. During this quarter, life and pensions sales were 14% lower at £2.6bn (2007: £3.1bn), the impact of expected seasonal trends exaggerated by lower transfer values. Consistent with our strategy to manage our mortgage exposure, gross mortgage lending decreased by 65% to £0.9bn (2007: £2.7bn). Healthcare sales increased by 19% on an APE basis to £19m (2007: £16m).


Individual SIPP funds under administration increased by 13% to £8.7bn2 (31 December 2007: £7.7bn), as the impact of net inflows of £1.9bn (2007: £2.7bn) was partly offset by a market-driven reduction in underlying asset values. During the period SIPP customer numbers increased by 30% to 61,000 (31 December 2007: 46,900) with average case sizes across our SIPP portfolio of £142,000 at the end of September (31 December 2007: £164,000).


Individual SIPP sales of £2.9bn were 19% lower than a strong prior year period that reflected heightened activity post A-day. Third quarter sales were 20% lower at £815m. This is largely due to the impact of market movements on average incoming transfer values, which continue to represent the majority of total SIPP sales.  


Group pensions sales increased by 10% to £2.3bn, reflecting strong levels of new and incremental business and a large scheme (£224m) won during the first quarter. Group SIPP volumes increased by 31% and accounted for 31% of total Group pensions sales (2007: 26%). At 30 September 2008, UK Group pensions funds under management were £14.6bn (31 December 2007: £15.0bn), the strong growth in new business volumes being offset by negative market movements.  

  Savings and investments sales increased by 2% to £2.1bn, though the third quarter saw a drop of 29% in the face of the turbulent market environment. The continued popularity of our retail portfolio bond helped increase Offshore bond sales by 158%. Sales of Mutual funds sold on our Wrap and Fundzone platforms increased by 21% to £493m. However, sales of Investment bonds continued to be impacted by the combination of market uncertainty and the changes in CGT rules and were 20% lower at £1.2bn.  


At 30 September 2008, funds under administration on Standard Life's Wrap platform had increased by 45% to £1.6bn (31 December 2007: £1.1bn). At the end of the quarter there were 334 IFA firms using the platform (31 December 2007: 209 firms) and 14,300 customers (31 December 2007: 8,100 customers) with an average fund size of £114,000 (31 December 2007: £133,000).  


At 30 September 2008 mortgages under management stood at £10.1bn (31 December 2007: £11.3bn), with an arrears rate of 0.30%, which is a fifth of the Council of Mortgage Lenders industry average reported at 30 June 2008.


Savings balances in our banking operations continue to increase with total savings balances at 30 September 2008 of £4.8bn (31 December 2007: £4.6bn). This total includes combined SIPP and Wrap balances of £1.3bn (31 December 2007: £0.6bn).


Europe

Life and pensions sales in Europe were 29%3 lower with the third quarter trend broadly matching this rate. In Ireland, sales of £228m were 44%3 lower, driven by decreasing property prices and a weak domestic stock market. Sales in Germany of £402m were 16%3 lower and were affected by changes in insurance contract regulations introduced at the beginning of the year and the recent introduction of transparency rules.


Canada

Canadian sales continue to grow following the successful repositioning of the business. Canadian new business increased by 32%3 to £1.6bn despite the adverse impact of the recent financial crisis on retail sales, which has reduced the overall growth reported in the third quarter to 1%. Sales of Group savings and retirement products benefited from a number of mid-size mandates and a large defined benefit administration mandate secured in the second quarter. Stronger sales in Group insurance reflect our continued success in the disability insurance segment.  


Asia Pacific

We have continued to see strong growth within our Indian and Chinese joint ventures and our Hong Kong operation. Combined sales across these operations increased by 31%3,4 on a PVNBP basis to £413m and by 74%3,4 on an APE basis to £91m despite volatile market conditions.  


In India, sales increased by 18%3,4 on a PVNBP basis and by 66%3,4 on an APE basis. Standard Life's share of these sales was £315m (2007: £147m). The number of financial consultants appointed by the joint venture has increased to approximately 188,000 (31 December 2007: 132,000).  


In China, sales volumes increased by 81%3 on both a PVNBP and an APE basis, reflecting strong growth in group products and in bank distribution and continued business expansion in major cities within existing provinces. Standard Life's share of these sales was £66m (2007: £33m).  


New business sales in Hong Kong were £32m (2007: £13m), representing an increase of 137%3 on a PVNBP basis and 245%3 on an APE basis.  



Standard Life Investments

Third party funds under management remained resilient in the face of extremely volatile markets, decreasing by 6% to £44.7bn (31 December 2007: £47.7bn) during the nine month period in which the FTSE All Share Index fell by 24%. Total funds under management decreased by 14% to £123.6bn (31 December 2007: £143.4bn). Excluding the impact of the UK annuity reinsurance transaction, which reduced funds under management by £6.7bn, total funds under management reduced by 10%. 


Money weighted average investment performance over 3, 5 and 10 year periods continues to be comfortably above median and remains a key driver of our strong institutional sales and pipeline. The strength of performance across a range of OEICs and Unit trusts is demonstrated by the high proportion of eligible funds, (19 out of 24), rated 'A' or above by Standard & Poor's.  


Balance sheet resilient

The Financial Groups Directive (FGD) surplus of £3.4bn at 30 September 2008 (30 June 2008: £3.5bn, 31 December 2007: £3.6bn) has been insensitive to equity market movements, with a period end solvency cover of 223% (30 June 2008: 206%, 31 December 2007: 166%). The insensitivity of the FGD surplus reflects the structure of the Group post Demutualisation as well as the extensive hedging strategy in place. Our FGD surplus is still strong in the event of further market weakness.



£bn

FGD surplus at 30 September 2008

3.4

A further 20% fall in equity markets

3.3

A further 30% fall in equity markets

2.6

A further 40% fall in equity markets

1.9



The Heritage With Profits Fund had a residual estate of £0.9bn at 30 September 2008 (30 June 2008: £1.2bn, 31 December 2007: £1.5bn). In order to maintain fairness for all with profits policyholders, Standard Life announced a reduction to final bonuses and an increase in market value reductions for certain with profit policies on 29 October 2008.


We have put in place a number of measures to manage our mortgage exposure during the ongoing period of difficult credit market conditions, and these led to net outflows of £1.2bn from our mortgage business. Following the second maturity from the Lothian securitisation programme, which took place on 24 October 2008, there are no securitisation maturities until 2011. Our banking operation remains well capitalised with a very high quality mortgage book, has access to a diverse range of funding sources and has actively reduced its funding requirements during the year.  


Acquisition of Vebnet 

On 16 September 2008 Standard Life announced that agreement had been reached on a £24.2m cash offer to acquire the entire issued and to be issued share capital of Vebnet (Holdings) plc. Following the satisfaction of all relevant terms this offer became wholly unconditional on 10 October 2008.


Vebnet has a well established position in the UK employee benefits and online reward market and has developed business activities in Europe and Asia. Vebnet has 145 corporate clients and 293,000 employee users of its flexible benefits proposition. The transaction is consistent with Standard Life's strategy to accelerate the development of its corporate business through strengthening its customer base, opening up new routes to market and developing its existing product range.


Standard Life group outlook

Conditions across all our markets remain difficult with the combination of weakening economic conditions and an unprecedented level of dislocation in financial markets. Retail investors are likely to remain cautious, preferring to allocate their funds to cash and lower risk assets.  Institutional mandates are still expected to grow, albeit at a lower level than the rate of growth seen over the past five years.


Standard Life remains strong and is well-positioned to weather the difficult market and economic conditions.










For further information please contact:


Institutional Equity Investors:



Gordon Aitken

0131 245 6799

Duncan Heath

0131 245 4742

Paul De'Ath

0131 245 9893



Retail Equity Investors:




Computershare    

0845 113 0045



Media:




Barry Cameron    

0131 245 6165 / 07712 486 463

Nicola McGowan

0131 245 4016 / 07782 191341

Neil Bennett (Maitland)    

020 7379 5151 / 07900 000 777



Debt Investors:




Andy Townsend        

0131 245 7260



  Notes to Editors


1.    Worldwide life and pensions net inflows do not include net inflows in respect of our Asia Pacific joint ventures and our Hong Kong subsidiary.


2.    Analysis of Individual SIPP funds under administration.





30 Sep

2008


31 Dec
2007


Change



£m


£m



£m



%


Insured Standard Life funds


2,655


2,752


(97)


(4)

Insured external funds


1,485


1,671


(186)


(11)

Collectives - Standard Life Investments


905


834


71


9

Collectives - Funds Network


680


603


77


13

Cash


839


484


355


73

Non collectives


2,092


1,332


760


57

Total


8,656


7,676


980


13

 









Insured


4,140


4,423


(283)


(6)

Non-insured


4,516


3,253


1,263


39

Total


8,656


7,676


980


13


Of the £8.7bn funds under administration at 30 September 2008, £0.7bn relate to funds on the Wrap platform.


3.    Comparisons for our International businesses are given on a constant currency basis.


4.    The growth percentages quoted for India, Asia Pacific life and pensions and Total worldwide life and pensions reflect the growth in sales in HDFC Standard Life Insurance Limited, rather than the growth in Standard Life's share of the joint venture. Sales quoted reflect Standard Life's share of the joint venture.


5.    There will be a conference call today for newswires and online publications at 8.00am hosted by David Nish, Group Finance Director, Keith Skeoch, Chief Executive of Standard Life Investments, and Paul Matthews, Managing Director of Distribution for UK Financial Services. Dial in telephone number +44 (0)20 7162 0025. Callers should quote Standard Life Media Call.


6.    There will be a conference call today for investors and analysts at 9.30am hosted by David Nish, Group Finance Director, Keith Skeoch, Chief Executive of Standard Life Investments, and Paul Matthews, Managing Director of Distribution for UK Financial Services. Dial in telephone number +44 (0)20 7162 0025. Callers should quote Standard Life Analysts & Investors Call. The conference ID number is 811976. A recording of this call will be available for replay for one week by dialing +44 (0)20 7031 4064 (access code 811976).




Insurance Operations net flows (Regulatory Basis)    

9 months ended 30 September 2008    



Gross inflows

Redemptions

Net inflows

Gross inflows

Redemptions

Net inflows


9 months to 

30 Sep 

2008

9 months to 

30 Sep 

2008

9 months to 

30 Sep 

2008

9 months to 

30 Sep 

2007

9 months to 

30 Sep 

2007

9 months to 

30 Sep 

2007


£m

£m

£m

£m

£m

£m

UK







Insured pensions - institutional

1,510

(924)

586

1,553

(836)

717

Insured pensions - other

4,451

(4,386)

65

5,424

(5,115)

309

Non-insured pensions (a)

1,523

(249)

1,274

1,199

(146)

1,053

Total pensions

7,484

(5,559)

1,925

8,176

(6,097)

2,079

Life products

1,704

(2,800)

(1,096)

2,094

(2,718)

(624)

Offshore bonds

468

(48)

420

168

(6)

162

Mutual Funds (b)

450

(17)

433

363

-

363

Total savings and investments

2,622

(2,865)

(243)

2,625

(2,724)

(99)

UK life and pensions

10,106

(8,424)

1,682

10,801

(8,821)

1,980

 

 






Europe

 






Ireland

256

(376)

(120)

359

(433)

(74)

Germany

520

(49)

471

436

(33)

403

Europe life and pensions

776

(425)

351

795

(466)

329

 

 






Canada

 






Group Savings and Retirement

1,135

(827)

308

787

(783)

4

Individual Insurance, Savings and Retirement

314

(475)

(161)

314

(432)

(118)

Group Insurance

228

(135)

93

190

(114)

76

Mutual Funds (b)

180

(128)

52

214

(114)

100

Canada life and pensions

1,857

(1,565)

292

1,505

(1,443)

62








Total worldwide life and pensions excluding Asia Pacific

12,739

(10,414)

2,325

13,101

(10,730)

2,371


(a)     UK Pensions net flows include the non-insurance element of SIPP product, which is also included within UK Mutual Fund net flows in the third party Investment Operations figures.

(b)     The Mutual Funds net flows are also included within Mutual Fund net flows in the third party Investment Operations figures.

  Insurance operations new business

9 months ended 30 September 2008






Single Premiums


New Regular Premiums


PVNBP


9 months to 30 Sep 2008

9 months to 30 Sep

 2007


9 months

to 30 Sep 2008

9 months

to 30 Sep

 2007


9 months 

to 30 Sep 2008

9 months to 30 Sep

 2007

Change

  (f)

Change

in constant currency

  (f) (g)



£m

£m


£m

£m


£m

£m

%

%


UK












Insured SIPP & Drawdown

991

2,001


26

42


1,124

2,222

(49%)

(49%)

 

Non-insured SIPP (a)

1,620

1,277


29

17


1,765

1,355

30%

30%

 

Individual SIPP

2,611

3,278


55

59


2,889

3,577

(19%)

(19%)

 

Individual Pensions (b)

472

531


26

30


571

660

(13%)

(13%)

 

Group Pensions (b)

868

825


353

337


2,292

2,086

10%

10%

 

Institutional Pensions

1,410

1,471


60

-


1,554

1,471

6%

6%

 

Pensions

5,361

6,105


494

426


7,306

7,794

(6%)

(6%)

 

Investment Bonds 

1,186

1,488


-

-


1,186

1,488

(20%)

(20%)

 

Offshore Bonds

433

168


-

-


433

168

158%

158%

 

Mutual Funds (c)

443

363


7

6


493

406

21%

21%

 

Savings and Investments 

2,062

2,019


7

6


2,112

2,062

2%

2%

 

Annuities

361

381


-

-


361

381

(5%)

(5%)

 

Protection

-

-


2

3


6

19

(68%)

(68%)

 

UK life and pensions

7,784

8,505


503

435


9,785

10,256

(5%)

(5%)

 


 

 


 

 


 

 

 

 

 

Europe

 

 


 

 


 

 

 

 

 

Ireland

182

290


9

15


228

354

(36%)

(44%)

 

Germany

30

40


36

35


402

417

(4%)

(16%)

 

Europe life and pensions

212

330


45

50


630

771

(18%)

(29%)

 


 

 


 

 


 

 

 

 

 

Canada

 

 


 

 


 

 

 

 

 

Group Savings and Retirement

503

258


33

17


943

481

96%

77%

 

Individual Insurance, Savings and Retirement

236

237


1

2


252

262

(4%)

(13%)

 

Group Insurance (d)

-

-


26

15


187

112

67%

50%

 

Mutual Funds (c)

180

214


-

-


180

214

(16%)

(24%)

 

Canada life and pensions

919

709


60

34


1,562

1,069

46%

32%

 


 

 


 

 


 

 

 

 

 

Asia Pacific

 

 


 

 


 

 

 

 

 

India (e) 

12

4


73

24


315

147

22% (h)

18%

(h)

China (e)

45

24


5

2


66

33

100%

81%

 

Hong Kong

8

6


6

1


32

13

146%

137%

 

Asia Pacific life and pensions

65

34


84

27


413

193

35% (h)

31%

(h)


 

 


 

 


 

 

 

 

 

Total worldwide life and pensions

8,980

9,578


692

546


12,390

12,289

(h)

(2%)

(h)


(a)    Non-insurance element of SIPP is also included within UK Mutual Funds cash inflows in the Investment Operations figures.

(b)    Single premiums include Department of Work and Pensions rebate premiums of £272m (2007: £231m), comprising Individual Pension rebates of £148m (2007: £132m) and Group Pensions rebates of £125m (2007: £99m).

(c)    9 months ended 30 September 2007 have been re-stated to include certain Mutual Funds. The Mutual Funds new business sales are also included within Mutual Funds cash inflows in the Investment Operations figures. 

(d)    Canada Group Insurance includes £2.4m of new regular premiums in respect of Consultaction policies, representing the comparable full premium for £0.3m of new annualised fee income.

(e)    Standard Life's share of the joint venture company's new business except as noted in (h) below.

(f)    % change is calculated on the figures rounded to millions.

(g)    Calculated using constant rates of exchange.

(h)    Calculated based on the percentage movement in the new business of HDFC Standard Life Insurance Company Limited as a whole to avoid distortion due to changes in the Group's shareholding in the joint venture during 2007.    

(i)    New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 9 months to 30 September 2008 were £1:C$1.98 (2007: £1:C$2.19) and £1:1.29 (2007: £1:1.48).    

                                                                                            

      Insurance operations new business continued

9 months ended 30 September 2008




APE


9 months 

to 30 Sep 

2008

9 months 

to 30 Sep 

2007


Change

(f)

  Change 

in constant 

currency  (f) (g)



£m

£m

%

%


UK






Insured SIPP & Drawdown

125

242

(48%)

(48%)


Non-insured SIPP (a)

191

144

33%

33%


Individual SIPP

316

386

(18%)

(18%)


Individual Pensions (b)

74

83

(11%)

(11%)


Group Pensions (b)

440

420

5%

5%


Institutional Pensions

201

147

37%

37%


Pensions

1,031

1,036

-

-


Investment Bonds 

118

149

(21%)

(21%)


Offshore Bonds

43

17

153%

153%


Mutual Funds (c)

52

42

24%

24%


Savings and Investments 

213

208

2%

2%


Annuities

37

38

3%

3%


Protection

2

3

(33%)

(33%)


UK life and pensions

1,283

1,285

-

-



 

 

 

 


Europe

 

 

 

 


Ireland

28

44

(36%)

(46%)


Germany

39

39

-

(14%)


Europe life and pensions

67

83

(19%)

(31%)



 

 

 

 


Canada

 

 

 

 


Group Savings and Retirement

83

42

98%

77%


Individual Insurance, Savings and Retirement

25

26

(4%)

(14%)


Group Insurance (d)

26

15

73%

55%


Mutual Funds (c)

18

21

(14%)

(23%)


Canada life and pensions

152

104

46%

31%



 

 

 

 


Asia Pacific

 

 

 

 


India (e)

74

25

70% (h)

66%

(h)

China (e)

10

5

100%

81%


Hong Kong

7

2

250%

245%


Asia Pacific life and pensions

91

32

82% (h)

74%

(h)


 

 

 

 


Total worldwide life and pensions

1,593

1,504

5% (h)

3%

(h)


(a)    Non-insurance element of SIPP is also included within UK Mutual Funds cash inflows in the Investment Operations figures.    

(b)    Single premiums include Department of Work and Pensions rebate premiums of £272m (2007: £231m), comprising Individual Pension rebates of £148m (2007: £132m) and Group Pensions rebates of £125m (2007: £99m).

(c)    9 months ended 30 September 2007 have been re-stated to include certain Mutual Funds. The Mutual Funds new business sales are also included within Mutual Funds cash inflows in the Investment Operations figures. 

(d)    Canada Group Insurance includes £2.4m of new regular premiums in respect of Consultaction policies, representing the comparable full premium for £0.3m of new annualised fee income.    

(e)    Standard Life's share of the joint venture company's new business except as noted in (h) below.        

(f)    % change is calculated on the figures rounded to millions.    

(g)    Calculated using constant rates of exchange.        

(h)    Calculated based on the percentage movement in the new business of HDFC Standard Life Insurance Company Limited as a whole to avoid distortion due to changes in the Group's shareholding in the joint venture during 2007.    

(i)    New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 9 months to 30 September 2008 were £1:C$1.98 (2007: £1:C$2.19) and £1:1.29 (2007: £1:1.48).


Investment operations

9 months ended 30 September 2008





Opening FUM

1 Jan 2008

Gross Inflows


Redemptions

Net Inflows

Market & other movements


Net movement in FUM

Closing FUM

30 Sep 2008




£m

£m


£m

£m

£m


£m

£m


UK

Mutual Funds (a)

6,020

925 

(b)

(868)

57 

(1,289)


(1,232)

4,788 



Private Equity

2,597

442 


(23)

419 

159 


578 

3,175 



Segregated Funds 

10,724

2,621 


(434)

2,187 

(1,338)

(c)

849 

11,573 



Pooled Property Funds

589

42 


42 

299 

(c)

341 

930 


Total UK


19,930

4,030 

 

(1,325)

2,705 

(2,169)


536

20,466 


Canada

Mutual Funds (a)

1,540

185 

(e)

(132)

53 

(167)


(114)

1,426 



Separate Mandates (d)

1,660

136 


(238)

(102)

(82)


(184)

1,476 


Total Canada


3,200

321 

 

(370)

(49)

(249)


(298)

2,902 


International

Europe

83

398 


(25)

373 

10 


383 

466 



Asia (excluding India)

124


(31)

(28)

(35)


(63)

61 



India

2,476

219 

(f)

219 

(418)


(199)

2,277 


Total International

2,683

620


(56)

564 

(443)


121

2,804 














Total worldwide investment products excluding money market funds

25,813

4,971


(1,751)

  3,220

(2,861)


359

  26,172  


Money market funds (g)

6,082


(1,489)

(1,489)

(321)


(1,810)

4,272 


Total worldwide investment products

31,895

4,971


 (3,240)

1,731 

(3,182)


(1,451)

30,444



Total third party funds under management (FUM) comprise the investment business noted above together with third party insurance contracts. New business relating to third party insurance contracts is disclosed as insurance business for reporting purposes. An analysis of total third party funds under management is shown below.

                                                            


Opening FUM

1 Jan 2008

Gross Inflows


Redemptions

Net Inflows

Market & other movements


Net movement in FUM

Closing FUM

30 Sep 2008



£m

£m


£m

£m

£m


£m

£m


Third Party Investment Products

31,895

4,971 


(3,240)

1,731 

(3,182)


(1,451)

30,444 


Third Party Insurance Contracts 

(new business classified as insurance products)

15,805

2,040 


(1,323)

717 

(2,220)

(c)

(1,503)

14,302 


Total third party funds under management

47,700

7,011 


(4,563)

2,448 

(5,402)


(2,954)

44,746 













Standard Life Investments - total funds under management

143,396








123,620 

(h)


(a)    Included within Mutual Funds are cash inflows which have also been reflected in UK and Canada Mutual Fund new business sales.    

(b)    In the 9 months to 30 September 2007 UK Mutual Funds gross inflows were £2,011m and net inflows were £1,401m. 

(c)    Included within market and other movements there is an internal reclassification between Property (£368m increase), Third Party Insurance contracts (£463m decrease) and Segregated Funds (£95m increase).  

(d)    Separate Mandates refers to investment funds products sold in Canada exclusively to institutional customers. These products contain no insurance risk and consist primarily of defined benefit pension plan assets for which Standard Life Investments exclusively provides portfolio advisory services.

(e)    In the 9 months to 30 September 2007 Canadian Mutual Funds gross inflows were £208m and net inflows were £100m.

(f)    International gross inflows include India where, due to the nature of the Indian investment sales market, the new business is shown as the net of sales less redemptions. 

(g)    Due to the nature of the money market funds, the flows shown are calculated using average net client balances. Other movements are derived as the difference between these average net inflows and the movement in the opening and closing FUM. 

(h)    Closing FUM reflects the transfer out of £6.7bn of FUM in relation to UK immediate annuity liabilities to Canada Life International Re, reflecting the reinsurance agreement disclosed in the press release dated 14 February 2008.

(i)    Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 30 September 2008. Investment fund flows are translated at average exchange rates. Gains and losses arising from the translation of funds denominated in foreign currencies are included in the market and other movements column. The principal closing exchange rates used as at 30 September 2008 were £1: C$1.90 

(31 December 2007: £1:C$1.96) and £1:1.27 (31 December 2007: £1:1.36). The principal average rates for the 9 months to 30 September 2008 were £1:C$1.98 (2007: £1:C$2.19) and £1:1.29 (2007: £1:1.48).

  Insurance Operations net flows (Regulatory Basis)    

3 months ended 30 September 2008    



Gross inflows

Redemptions

Net inflows

Gross inflows

Redemptions

Net inflows


3 months to 

30 Sep 

2008

3 months to 

30 Sep 

2008

3 months to 

30 Sep 

2008

3 months to 

30 Sep 

2007

3 months to 

30 Sep 

2007

3 months to 

30 Sep 

2007


£m

£m

£m

£m

£m

£m

UK







Insured pensions - institutional

629

(268)

361

522

(258)

264

Insured pensions - other

1,242

(1,418)

(176)

1,631

(1,662)

(31)

Non-insured pensions (a)

449

(85)

364

370

(56)

314

Total pensions

2,320

(1,771)

549

2,523

(1,976)

547

Life products

335

(936)

(601)

650

(915)

(265)

Offshore bonds

176

(21)

155

86

(2)

83

Mutual Funds (b)

158

(7)

151

144

-

144

Total savings and investments

669

(964)

(295)

880

(916)

(38)

UK life and pensions

2,989

(2,735)

254

3,402

(2,893)

510

 

 






Europe

 






Ireland

81

(122)

(41)

107

(120)

(13)

Germany

177

(18)

160

147

(16)

131

Europe life and pensions

258

(139)

119

254

(136)

118

 

 






Canada

 






Group Savings and Retirement

257

(255)

2

235

(225)

10

Individual Insurance, Savings and Retirement

92

(149)

(57)

108

(144)

(36)

Group Insurance

77

(45)

32

65

(41)

24

Mutual Funds (b)

49

(38)

11

65

(33)

32

Canada life and pensions

475

(487)

(12)

473

(443)

30








Total worldwide life and pensions excluding Asia Pacific

3,722

(3,361)

361

4,129

(3,471)

657

 

(a)    UK Pensions net flows include the non-insurance element of SIPP product, which is also included within UK Mutual Fund net flows in the third party Investment Operations figures.

(b) The Mutual Funds net flows are also included within Mutual Fund net flows in the third party Investment Operations figures.



Insurance operations new business 

3 months ended 30 September 2008 




Single Premiums


New Regular Premiums


PVNBP


3 months to 30 Sep 2008

3 months to 30 Sep 2007


3 months to 30 Sep 2008

3 months to 30 Sep 2007


3 months to 30 Sep 2008

3 months to 30 Sep 2007

Change

  (e)


Change

in constant currency

  (e) (f)



£m

£m


£m

£m


£m

£m

%


%


UK













Insured SIPP & Drawdown

236

572


7

11


272

624

(56%)


(56%)


Non-insured SIPP (a)

502

370


8

7


543

397

37%


37%


Individual SIPP

738

942


15

18


815

1,021

(20%)


(20%)


Individual Pensions (b)

118

134


7

10


136

180

(24%)


(24%)


Group Pensions (b)

203

241


85

91


489

543

(10%)


(10%)


Institutional Pensions

590

489


-

-


590

489

21%


21%


Pensions

1,649

1,806


107

119


2,030

2,233

(9%)


(9%)


Investment Bonds 

161

449


-

-


161

449

(64%)


(64%)


Offshore Bonds

163

84


-

-


163

84

94%


94%


Mutual Funds (c)

151

144


2

2


169

163

4%


4%


Savings and Investments 

475

677


2

2


493

696

(29%)


(29%)


Annuities

109

124


-

-


109

124

(12%)


(12%)


Protection

-

-


1

1


2

6

(67%)


(67%)


UK life and pensions

2,233

2,607


110

122


2,634

3,059

(14%)


(14%)



 

 


 

 


 

 

 


 


Europe

 

 


 

 


 

 

 


 


Ireland

56

87


2

3


71

101

(30%)


(40%)


Germany

10

13


13

13


140

157

(11%)


(23%)


Europe life and pensions

66

100


15

16


211

258

(18%)


(30%)



 

 


 

 


 

 

 


 


Canada

 

 


 

 


 

 

 


 


Group Savings and Retirement

65

67


8

7


176

142

24%


13%


Individual Insurance, Savings and Retirement

67

82


-

-


72

90

(20%)


(26%)


Group Insurance 

-

-


9

5


64

34

88%


77%


Mutual Funds (c)

49

65


-

-


49

65

(25%)


(29%)


Canada life and pensions

181

214


17

12


361

331

9%


1%



 

 


 

 


 

 

 


 


Asia Pacific

 

 


 

 


 

 

 


 


India (d)

2

-


26

7


109

45

20%

(g)

20%

(g)

China (d)

14

11


2

1


24

14

71%


50%


Hong Kong

2

5


3

-


14

9

56%


45%


Asia Pacific life and pensions

18

16


31

8


147

68

30% 

(g)

27%

(g)


 

 


 

 


 

 

 


 


Total worldwide life and pensions

2,498

2,937


173

158


3,353

3,716

(11%)

(g)

(13%)

(g)


(a)    Non-insurance element of SIPP is also included within UK Mutual Fund cash inflows in the Investment Operations figures.

(b)    Single premiums include Department of Work and Pensions rebate premiums of £93m (2007: £66m), comprising Individual Pension rebates of £48m (2007: £39m) and Group Pensions rebates of £45m (2007: £27m).

(c)    3 months ended 30 September 2007 have been re-stated to include certain Mutual Funds. The Mutual Funds new business sales are also included within Mutual Funds cash inflows in the Investment Operations figures

(d)    Standard Life's share of the Joint Venture Company's New Business except as noted in (g) below.

(e)    % change is calculated on the figures rounded to millions.

(f)    Calculated using constant rates of exchange.

(g)    Calculated based on the percentage movement in the new business of HDFC Standard Life Insurance Company Limited as a whole to avoid distortion due to changes in the Group's shareholding in the joint venture during 2007.

(h)    New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 9 months to 30 September 2008 were £1: C$1.98 (2007: £1: C$2.19) and £1: 1.29 (2007: £1: 1.48).


  Insurance operations new business continued

3 months ended 30 September 2008 






APE


3 months to 

30 Sep 

2008

3 months to 

30 Sep 

2007


Change

(e)

  Change 

in constant

currency  (e) (f)



£m

£m

%

%


UK






Insured SIPP & Drawdown

31

68

(54%)

(54%)


Non-insured SIPP (a)

58

43

35%

35%


Individual SIPP

89

111

(20%)

(20%)


Individual Pensions (b)

19

23

(17%)

(17%)


Group Pensions (b)

105

116

(9%)

(9%)


Institutional Pensions

59

49

20%

20%


Pensions

272

299

(9%)

(9%)


Investment Bonds 

16

45

(64%)

(64%)


Offshore Bonds

16

9

78%

78%


Mutual Funds (c)

18

17

6%

6%


Savings and Investments 

50

71

(30%)

(30%)


Annuities

12

12

-

-


Protection

1

1

-

-


UK life and pensions

335

383

(13%)

(13%)



 

 

 

 


Europe

 

 

 

 


Ireland

9

12

(25%)

(35%)


Germany

14

15

(7%)

(23%)


Europe life and pensions

23

27

(15%)

(28%)



 

 

 

 


Canada

 

 

 

 


Group Savings and Retirement

15

13

15%

4%


Individual Insurance, Savings and Retirement

7

9

(22%)

(26%)


Group Insurance 

9

5

80%

80%


Mutual Funds (c)

5

6

(17%)

(29%)


Canada life and pensions

36

33

9%

-



 

 

 

 


Asia Pacific

 

 

 

 


India (d)

26

8

69% (g)

70%

(g)

China (d)

4

3

33%

43%


Hong Kong

4

1

300%

238%


Asia Pacific life and pensions

34

12

65% (g)

77%

(g)


 

 

 

 


Total worldwide life and pensions

428

455

(8%)(g)

(9%)

(g)


(a)    Non-insurance element of SIPP is also included within UK Mutual Fund cash inflows in the Investment Operations figures.

(b)    Single premiums include Department of Work and Pensions rebate premiums of £93m (2007: £66m), comprising Individual Pension rebates of £48m (2007: £39m) and Group Pensions rebates of £45m (2007: £27m).

(c)    3 months ended 30 September 2007 have been re-stated to include certain Mutual Funds. The Mutual Funds new business sales are also included within Mutual Funds cash inflows in the Investment Operations figures.

(d)    Standard Life's share of the Joint Venture Company's New Business except as noted in (g) below.

(e)    % change is calculated on the figures rounded to millions.

(f)    Calculated using constant rates of exchange.

(g)    Calculated based on the percentage movement in the new business of HDFC Standard Life Insurance Company Limited as a whole to avoid distortion due to changes in the Group's shareholding in the joint venture during 2007.

(h)    New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 9 months to 30 September 2008 were £1:C$1.98 (2007: £1:C$2.19) and £1:1.29 (2007: £1:1.48).


Investment operations

3 months ended 30 September 2008




Opening FUM

1 July 2008

Gross Inflows


Redemptions

Net Inflows

Market & other movements


Net 

movement 

in FUM

Closing FUM

30 Sep 2008




£m

£m


£m

£m

£m


£m

£m


UK

Mutual Funds (a)

5,375 

352  

(b)

(299)

53 

(640)


(587)

4,788 



Private Equity

2,955 

232 


(8)

224 

(4)


220 

3,175 



Segregated Funds 

12,289 

218  


(196)

22 

(738)

(c )

(716)

11,573 



Pooled Property Funds

616 

-  


-

314 

(c )

314 

930 


Total UK


21,235 

802 


(503)

299

(1,068)


769

20,466


Canada

Mutual Funds (a)

1,469 

55 

(e)

(42)

13 

(56)


(43)

1,426 



Separate Mandates (d)

1,665 

30 


(134)

(104)

(85)


(189)

1,476 


Total Canada


3,134 

85 


(176)

(91)

(141)


(232)

2,902 


International

Europe

73 

380 


(3)

377 

16 


393 

466 



Asia (excluding India)

85 


(4)

(3)

(21)


(24)

61 



India 

2,205 

(16) 

(f)

(16)

88 


72 

2,277 


Total International

2,363 

365 


(7)

358 

83 


441 

2,804 













Total worldwide investment products excluding money market funds

26,732

1,252


(686)

566

(1,126)


(560)

26,172


Money market funds (g) 

5,497 

-  


(1,173)

(1,173)

(52)


(1,225)

4,272 


Total worldwide investment products

32,229 

1,252 


(1,859)

(607)

(1,178)


(1,785)

30,444 



Total third party funds under management comprise the investment business noted above together with third party insurance contracts. New Business relating to third party insurance contracts is disclosed as insurance business for reporting purposes. An analysis of total third party funds under management is shown below.


                                                    


Opening FUM

1 July 2008

Gross Inflows


Redemptions

Net Inflows

Market & other movements


Net movement 

in FUM

Closing FUM

30 Sep 2008



£m

£m


£m

£m

£m


£m

£m


Third Party Investment Products    

32,229 

1,252 


(1,859)

(607)

(1,178)


(1,785)

30,444 


Third Party Insurance Contracts 

(new business classified as insurance products)

15,253 

793 


(396)

397 

(1,348)

(c )

(951)

14,302 


Total third party funds under management

47,482 

2,045 


(2,255)

(210)

(2,526)


(2,736)

44,746 



 








 


Standard Life Investments - total funds under management    

130,553 








123,620 

(h)



(a)    Included within Mutual Funds are cash inflows which have also been reflected in UK and Canada Mutual Fund new business sales.

(b)    In the 3 months to 30 September 2007 UK Mutual Funds gross inflows were £511m and net inflows were £288m.  

(c)    Included within market and other movements there is an internal reclassification between Property (£368m increase), Third party Insurance contracts (£463m decrease) and Segregated Funds (£95m increase).  

(d)    Separate Mandates refers to investment funds products sold in Canada exclusively to institutional customers. These products contain no insurance risk and consist primarily of defined benefit pension plan assets for which SLI exclusively provides portfolio advisory services.

(e)    In the 3 months to 30 September 2007 Canadian Mutual Funds gross inflows were £57m and net inflows were £31m.

(f)    International gross inflows include India where, due to the nature of the Indian investment sales market, the new business is shown as the net of sales less redemptions. 

(g)     Due to the nature of the money market funds, the flows shown are calculated using average net client balances. Other movements are derived as the difference between these average net inflows and the movement in the opening and closing FUM. 

(h)    Closing FUM reflects the transfer out of £6.7bn of FUM in relation to UK immediate annuity liabilities to Canada Life International Re, reflecting the reinsurance agreement disclosed in the press release dated 14 February 2008.

(i)     Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 30 September 2008. Investment fund flows are translated at average exchange rates. Gains and losses arising from the translation of funds denominated in foreign currencies are included in the market and other movements column. The principal closing exchange rates used as at 30 September 2008 were £1: C$1.90 (30 June 2008: £1:C$2.02) and £1:1.27 (30 June 2008: £1: 1.26). The principal average rates for the 9 months to 30 September 2008 were 

£1: C$1.98 (2007: £1:C$2.19) and £1:1.29 (2007: £1:1.48). 




Insurance operations new business




15 months ended 30 September 2008







Present Value of New Business Premiums (PVNBP)


3 months 

to 30 Sep 

2008

3 months 

to 30 June 

2008

3 months 

to 31 March 

2008

3 months  

to 31 Dec 

2007(a)

3 months  

to 30 Sep 

2007


£m

£m

£m

£m

£m

UK






Insured SIPP & Drawdown

272

379

473

489

624

Non-insured SIPP

543

636

586

470

397

Individual SIPP

815

1,015

1,059

959

1,021

Individual Pensions

136

276

159

106

180

Group Pensions

489

907

896

731

543

Institutional Pensions

590

604

360

544

489

Pensions

2,030

2,802

2,474

2,340

2,233

Investment Bonds 

161

373

652

336

449

Offshore Bonds

163

152

118

116

84

Mutual Funds

169

176

148

158

163

Savings and Investments 

493

701

918

610

696

Annuities

109

132

120

113

124

Protection

2

-

4

5

6

UK life and pensions

2,634

3,635

3,516

3,068

3,059


 


 

 

 

Europe

 


 

 

 

Ireland

71

63

94

103

101

Germany

140

141

121

305

157

Europe life and pensions

211

204

215

408

258


 


 

 

 

Canada

 


 

 

 

Group Savings and Retirement

176

455

312

357

142

Individual Insurance, Savings and Retirement

72

75

105

95

90

Group Insurance

64

59

64

63

34

Mutual Funds

49

56

75

70

65

Canada life and pensions

361

645

556

585

331


 


 

 

 

Asia Pacific

 


 

 

 

India (b) (c)

109

59

147

40

45

China (b)

24

23

19

22

14

Hong Kong

14

13

5

11

9

Asia Pacific life and pensions

147

95

171

73

68


 


 

 

 

Total worldwide life and pensions

3,353

4,579

4,458

4,134

3,716


(a)    The PVNBP sales for the 3 months to December 2007 are different from those published in the full year 2007 new business press release issued on 30 January 2008 as they incorporate year end non-economic assumption changes calculated and published in the Preliminary Results 2007 on 12 March 2008. 

(b)    Amounts shown reflect Standard Life's share of the Joint Venture Company's new business.

(c)    The PVNBP for all periods in 2008 for India include revisions to opening assumptions. These were not reflected in the published results for 6 months to 30 June 2008 and for 3 months to 31 March 2008. Consistent with treatment in previous reporting periods PVNBP sales for all territories will exclude year end non-economic assumption changes, which will not be reflected in the PVNBP results until publication of the Preliminary Results 2008.    




This information is provided by RNS
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