Standard Life Plc retreated in London after Scotland’s largest insurer reported first-half profit that missed some analyst estimates and net inflows slowed.
The shares dropped as much as 3.8 percent, the biggest loss since March, and fell 2.7 percent to 442.2 pence at 12:46 p.m. Operating profit, hurt by a 39 million-pound ($61 million) charge from lower annuity sales, rose 6 percent to 290 million pounds, the Edinburgh-based company said Tuesday. That compares with a 302 million-pound estimate from JPMorgan Chase & Co. analyst Ashik Musaddi.
The stock declined as Chief Executive Officer David Nish, 55, delivered his last earnings before handing over to Keith Skeoch on Wednesday. Skeoch, who has run Standard Life’s money-management arm since 2004, said some investors may be overlooking the company’s growth story.
“With so much going on in the marketplace at the moment I just wonder whether people have really got to the nub of what is driving growth,” Skeoch said in a telephone interview. “There is more underlying momentum in terms of fee-based revenue, which as David says, makes up 95 percent of income.”
During Nish’s six-year tenure as CEO, Standard Life has shifted to fee-generating asset management and away from insurance, which carries higher capital costs.
Net inflows for the group slowed to 3.4 billion pounds from 4.3 billion pounds a year earlier. Fee-based revenue increased 17 percent to 761 million pounds in the six months through June.
Skeoch, who expects to remain CEO of Standard Life Investments for the “foreseeable future,” said the business will be driven by organic growth, though he didn’t rule out following up last year’s purchase of Ignis Asset Management Ltd. with more acquisitions.
Group assets under administration climbed 1.9 percent to 302.1 billion pounds since the end of 2014.
Contributions from annuities are expected to fall by as much as 15 million pounds for the full year after changes by the U.K. government to the retirement system last year, the company said. Earnings from asset liability management will fall by between 30 million pounds to 40 million pounds, it said.
Skeoch’s Standard Life Investment unit increased its assets under management to 250 billion pounds from 245.9 billion pounds, as 5.2 billion pounds of third-party net inflows helped offset a 1.7 billion-pound lost mandate.