Reduced pensions savings and market turbulence dented Standard Life’s UK business in the first half of the year.
UK new business sales were down 15 per cent at £1.53 billion – due to “lower asset values as well as reduced increment levels”, the Edinburgh-based group said.
When payments by current customers are cut, this feeds into the firm’s ‘new business’ sales to reflect lower premium values. Market turmoil has also impacted the value of assets being transferred into its schemes.
Despite the overall fall, Standard Life said the number of customers opening tax-efficient self-invested personal pensions (SIPPS) rose 13 per cent to 74,700, while its corporate pensions business performed well.
Tumbling stock markets eroded the group’s capital buffer from £3.3 billion to £3.1 billion during the first half of the year.
This also sent the firm to a bottom line pre-tax loss of £20 million from a £161 million profit the previous year. At the underlying level, operating profits slid 35 per cent to £348 million.
Chief executive Sandy Crombie said: “The recession has had an inevitable impact on our performance in the first half of 2009.
“However, today’s results highlight Standard Life’s robust business model and the ongoing resilience of our balance sheet.”
Standard Life added that new business had also been impacted by its decision not to renew lower-margin bulk sales of investment bonds to major institutional investors, which boosted sales last year.
Despite improvements in its Canadian business and further investment in its growing Asian arm, Standard Life said the economic outlook was “challenging”.
But the group added that it had made £26 million out of its planned £75 million in cost savings under a current programme which has cost 200 UK jobs so far.
The company has also outsourced elements of its IT work as well as automating customer services to save money. Shares were virtually flat yesterday as the figures underwhelmed the City.
Panmure Gordon’s Barrie Cornes said: “Standard Life has reported a mixed bag of results, not surprisingly impacted by the current investment markets and tough trading conditions.”
The group has about 10,000 staff overall, of which around 7,000 are in the UK.