Standard Life, unsettled by the resignation on Tuesday night of Trevor Matthews, respected head of its UK operations, to become chief executive of Friends Provident, yesterday reported a slightly worse than expected setback to its new business in the final months of last year.

Its UK life and pensions sales in the fourth quarter of 2007 were 20 per cent down on the same months of 2006 at £2.92 billion.

Meantime volatile stock markets and the credit crunch squeezed worldwide demand for investment products. Standard Life said its global operations attracted new investment business of £1.05 billion in the fourth quarter, a 38 per cent drop year on year.

That still left Standard Life with net investment inflows of £6.361 billion for 2007 as a whole, a 39 per cent improvement.

Its full-year worldwide life and pensions sales were up 12 per cent at £16.312 billion, including a record £13.174 billion in the UK, a 15 per cent gain.

Sandy Crombie, chief executive, said he expects challenging market conditions to continue to impact Standard Life's results in the first quarter of this year - although "early indications" suggest that UK life and pensions sales are already running ahead of those at the same stage last year.

Mr Crombie has taken over as head of UK financial services until a successor is found for Mr Matthews, whose resignation followed weeks of speculation that he might defect to Friends Provident after Pearl Assurance outbid Standard Life for Resolution.

Standard Life's shares have also been wilting on the stock market, losing the early momentum after the company abandoned its mutual ownership and brought them to the stock market at 230p in July, 2006. Yesterday they closed at 224p, losing 4p on the day.