Standard Life Open to More Deals After Profits Top EstimatesSarah Jones
Standard Life Plc Chief Executive Officer David Nish is open to further acquisitions after Scotland’s largest insurer reported a jump in profit beating analyst estimates. The stock surged the most in more than five months.
The company increased operating profit, excluding businesses sold, 19 percent to 604 million pounds ($932 million) for the full year, as the asset management business, run by Keith Skeoch, helped to offset a slump in annuities, according to a statement on Friday. That compares with the 559 million-pound average estimate of 19 analysts provided by the insurer.
Nish, 54, has been reshaping Standard Life into an fee-generating asset management business, while cutting back on operations that require more capital, such as the sale of the Canadian business to Manulife Financial Corp. for 2.2 billion pounds. The company bought Ignis Asset Management Ltd. in March, helping boost assets and fee-based revenue.
“Our whole focus is all about increasing the amount of assets that we manage,” Nish said on a conference call. “If we feel there is a need to buy something else to accelerate our strategy, we would look at it. But at the moment I think we have got our hands full integrating the current business.”
The shares jumped as much as 4 percent, the biggest intraday gain since the insurer announced the sale of its Canadian business in September. They were trading at 421.6 pence at 10:54 a.m. in London, up 3.1 percent.
Standard Life Investments saw a 30 percent jump in full-year operating profit to 257 million pounds, boosted by 43 percent boost in revenue from managing assets for external clients. Nish said Ignis had broadened the business with the company now managing assets for 15 life insurance companies which was an “important step up.”
The insurer’s U.K. business was hurt by the government’s pension reforms, which removed the incentive for retirees to buy an annuity product. The margin from annuity new business in 2014 was 66 percent lower than a year ago.
Standard Life said it expects contributions from annuities to drop by between 10 million pounds to 15 million pounds this year, with the contribution from managing the assets seen 30 million pounds to 40 million pounds lower.
Nish’s total remuneration rose 30 percent to 5.47 million pounds in 2014, with a base salary of more than 800,000 pounds. Skeoch’s compensation increased 21 percent to 5.27 million, with a base salary of about 447,000 pounds.