Standard Life saw UK profits fall 15 per cent during the first half of this year, as annuity sales continued to plummet following the at-retirement reforms.
The firm’s interim results, published today (4 August) showed a UK pre-tax operating profit of £141m, down 15 per cent from £165m during in the same period in 2014.
New business margins fell to £4m from £9m year-on-year due to a 66 per cent reduction in annuity sales.
Standard Life saw a £39m reduction in spread/risk margin due to lower annuity sales and the reduced benefit from asset liability management.
The group expects the full year contribution from annuity new business to reduce by between £10-£15m and the contribution from asset liability management to reduce by between £30-£40m compared to full year 2014.
However, the group did increase its operating profit in the first six months by 6 per cent to £290m, up from £274m during the same period last year.
Assets under administration of £130.4bn, including UK fee business assets, were also up 4 per cent to £107bn during the period, driven by workplace and retail new fee business net inflows up 23 per cent to £2.9bn.
Assets in the firm’s drawdown proposition rose 12 per cent from the full year 2014 to almost £13bn, although these gains were offset by the annuity business decreasing by 49 per cent to £38m.
The wrap platform continued to attract advisers, with assets under administration up 11 per cent to £23.3bn from £20.9bn over the full year 2014, while the number of adviser firms on the platform increased by 65 to 1,405 over the first half.
Paul Matthews, chief executive for the UK and Europe, added that demand for the firm’s auto-enrolment solutions helped add 120,000 new pension scheme members during the first half of the year, making 3,700 new schemes and 680,000 joiners since the legislation began to roll-out.
“We continue to attract assets onto our wrap platform, while also increasing the number of financial adviser firms using it. Along with offering expertise through 1825, our UK-wide financial advice business, we are also meeting the rising demand for advice through our ongoing support for advisers, helping them to grow their businesses.”
David Nish, the outgoing group chief executive, said that Standard Life is continuing to see the benefits of expanding distribution capabilities and strategic relationships, with 70 per cent of net inflows from outside the UK and strong growth in net inflows through the wholesale channel.
“Our UK fee based propositions continue to build momentum with regular contributions into our workplace pensions up 15 per cent.
“The strength of these propositions, investment solutions and our market positioning means we have been able to help our customers with the new pensions regulations and continue to support them as saving for their futures becomes increasingly front of mind.”
peter.walker@ft.com
