Standard Life Aberdeen has said it will return £1.75bn to its shareholders once it sells its insurance arm to Phoenix Group.
The money is "surplus" because of proceeds from the transaction and lower capital requirements once Standard Life Aberdeen has sold the business.
According to plans published this morning (29 March) Standard Life Aberdeen will return £1bn through a B share scheme involving the issuing of new B shares to shareholders which the company will then redeem for cash.
After this, Standard Life Aberdeen will then return another £750m through a share buyback programme.
Sir Gerry Grimstone, chairman of Standard Life Aberdeen, said: "The last year has been a period of significant change for Standard Life Aberdeen with the proposed sale of the UK and European insurance businesses completing our transformation to a capital light investment company.
"We are continuing to focus on harnessing the breadth and depth in our investment capabilities to deliver cost effective solutions to meet the needs of our clients and customers across multiple channels and geographies.
"The cash generated from the sale will enable us to continue to invest in the development of our business and also to return surplus capital to shareholders."
He added that the proposal to return up to £1.75bn to shareholders represented more than 15 per cent of the company's market capitalisation at close of business on Friday 25 May 2018.
Standard Life Aberdeen - which was formed last year through the merger of insurer Standard Life and asset manager Aberdeen - announced the sale of its insurance arm in a £3.2bn deal in February.
The company will keep hold of its three adviser platforms - Wrap, Elevate and Parmenion - and 1825, its financial advice business.
The sale came after Standard Life Aberdeen's biggest client Scottish Widows withdrew £109bn of assets from the company.
At the time Scottish Widows chief executive Antonio Lorenzo said the merger of Standard Life and Aberdeen has resulted in his company's assets being managed by a "material competitor".
damian.fantato@ft.com
