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Kilteragh
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I thought this would be today's hot topic! Perhaps it has been discussed somewhere else - taken from yesterday's Sunday Times
Standard Life prepares for float
William Lewis and Louise Armitstead
THE board of Standard Life, Europe’s biggest mutually owned life company, is drawing up secret plans to restructure the business in a bid to shore up its financial position.
Advisers at UBS have been hired to prepare Standard Life for a £5 billion stock-market flotation, as a possible option for restructuring.
The board of Standard Life is thought to favour flotation, but it is also exploring raising capital in the bond market. Standard Life could also demerge its American subsidiaries or its investment division, which has £86.5 billion of funds under management.
The investment-banking advice has been sought as talks continue between Standard Life and the Financial Services Authority (FSA) on the company’s capital adequacy under the regulator’s new accounting practices for life insurers.
During the talks, which started at the beginning of December, it has emerged that Standard Life’s capital strength will look considerably weaker under the regulator’s new “realistic” accounting rules. As a result, the company is likely to have to raise capital to comply.
In recent months Standard Life has insisted that it will remain a mutual, but the board now recognises that it needs to consider demutualisation in order to raise funds. In addition, the new regulatory approach from the FSA makes a stock-market listing more attractive.
“The mutual structure does not fit the FSA’s new regime,” said one person with knowledge of the board’s thinking.
As Standard Life seeks to find ways to preserve capital, it is also expected to cut bonus payments to policyholders by at least 10% this year.
The plan to demutualise marks a radical change in position at Standard Life, which in the past three years has firmly quashed two demutualisation campaigns launched by disaffected policyholders.
Although all life insurers were hit by plummeting stock markets, Standard Life was the worst affected as it had the highest equity exposure for longest.
Ned Cazalet, analyst at Cazalet Consulting, said: “The present management has presided over the company during a time when its capital base has been eroded by billions of pounds in three years.
“Its with-profits fund is in tatters and its reputation damaged. There need to be big changes at the top before Standard Life can successfully raise any money.”
Standard Life prepares for float
William Lewis and Louise Armitstead
THE board of Standard Life, Europe’s biggest mutually owned life company, is drawing up secret plans to restructure the business in a bid to shore up its financial position.
Advisers at UBS have been hired to prepare Standard Life for a £5 billion stock-market flotation, as a possible option for restructuring.
The board of Standard Life is thought to favour flotation, but it is also exploring raising capital in the bond market. Standard Life could also demerge its American subsidiaries or its investment division, which has £86.5 billion of funds under management.
The investment-banking advice has been sought as talks continue between Standard Life and the Financial Services Authority (FSA) on the company’s capital adequacy under the regulator’s new accounting practices for life insurers.
During the talks, which started at the beginning of December, it has emerged that Standard Life’s capital strength will look considerably weaker under the regulator’s new “realistic” accounting rules. As a result, the company is likely to have to raise capital to comply.
In recent months Standard Life has insisted that it will remain a mutual, but the board now recognises that it needs to consider demutualisation in order to raise funds. In addition, the new regulatory approach from the FSA makes a stock-market listing more attractive.
“The mutual structure does not fit the FSA’s new regime,” said one person with knowledge of the board’s thinking.
As Standard Life seeks to find ways to preserve capital, it is also expected to cut bonus payments to policyholders by at least 10% this year.
The plan to demutualise marks a radical change in position at Standard Life, which in the past three years has firmly quashed two demutualisation campaigns launched by disaffected policyholders.
Although all life insurers were hit by plummeting stock markets, Standard Life was the worst affected as it had the highest equity exposure for longest.
Ned Cazalet, analyst at Cazalet Consulting, said: “The present management has presided over the company during a time when its capital base has been eroded by billions of pounds in three years.
“Its with-profits fund is in tatters and its reputation damaged. There need to be big changes at the top before Standard Life can successfully raise any money.”
