Standard Life bucks market trend to record steep profits rise

LIFE and pensions group Standard Life today said half-year profits rose 51% against a backdrop of continuing economic uncertainty.

The Edinburgh-based firm's improvement to £534 million came after worldwide life and pensions new business sales rose 5% to £9.1 billion in the first six months of the year, with the figure in the UK "constant" at £7.2 billion in a challenging market.

New business profits generated by the UK life and pensions operation increased by 4% to £138 million, the firm added.

Life and pension sales saw the impact of the change in pension rules in 2006 begin to drop-out, with the spike in sales seen after "A-Day" now on the wane.

First half individual sales of DIY pensions known as self-invested personal pensions (SIPPs) – highly popular after A-Day widened the scope of allowable investments – were down 19% to £2.1 billion.

But the company stuck by its expectation that the UK SIPP market will double in size to £100 billion of assets by 2011, adding that it planned several changes to its SIPPs product in the second half of 2008.

Group pension sales of £1.8 billion increased by 17% compared to a strong period a year earlier, reflecting a further sign of the shift towards group personal pension schemes and thanks also to a large scheme win.

Standard Life added that sales across its savings and investments portfolio increased by 19% to £1.6 billion, due to continued strong offshore bond sales, which have more than tripled compared to a year earlier.

Recent changes to the capital gains tax regime has so far had a "mixed impact" on the portfolio, it added.

In mortgages, Standard said its book stood at £10.6 billion at the end of June, a fall of £700 million on December but with a low arrears rate of 0.24%.

Chief executive Sandy Crombie described the company's first half trading as "successful" and said a 7% increase in its dividend reflected "our confidence about the future".