Standard Life shares slip on pension worries, slowing inflows

Demand for Standard Life Investments’ MyFolio and multi-asset suites helped ease the pain of falling annuity sales, Standard Life said in its first half results.

Standard Life shares slip on pension worries, slowing inflows

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Standard Life Investments’ total assets under management rose 2% or £4.1bn in the first half of 2015, driven largely by £7.1bn in inflows into its institutional and wholesale propositions, which more than offset the £1.9bn in outflows seen in its Ignis business.This outflow included a divestment of £1.7bn from one, large, low-revenue margin mandate, the firm said.

Total net inflows however, fell 38% during the period, Standard Life said, on the back of higher net outflows from stratgetic partner life business. Following the acquisition of Ignis, this type of business includes a mandate to manage assets on behalf of the Phoenix Group.

“The closed nature of this mandate of insurance business means it in in long-term run off and these net outflows are expected.”If Ignis is excluded, total net inflows rose 103% to £5.9bn, the firm said. Within the SLI business unit, pre-tax operating profit rose 51% to £154m.

This improvement, Standard Life said, was helped by the acquisition of Ignis, a 31% rise in third party revenue and the continued shift toward higher margin products including UK mutual funds and multi-asset investment solutions.

According to Standard Life fee revenue increased 4% to £314m (H1 2014: £303m) boosted by higher assets under administration as well as the addition of over 120,000 new customers during the period.

“£6.0bn (86%) of total MyFolio AUM of £6.9bn is distributed through the UK business and a quarter of total platform AUA of £24.3bn is managed by Standard Life Investments,” it said.Looking ahead, the firm said it would continue to expand SLI’s geographic reach, building on success in overseas markets through strengthening its distribution as well as relationships with global distribution partners in the US, Canada, India, Japan and across the Standard Life Group.

The integration of Ignis is on track and we expect to achieve £50m of planned annual cost savings and our EBITDA margin target of 45% by 2017.

”At a group level, while net flows continued to grow overall, net inflows have fallen in each of the last three six month periods, from $6.4bn in 2013, to £4.3bn in 2014 and £3.4bn for the most recent first half.

“Following changes announced in the Budget in March 2014 and in line with guidance given at our Full year results 2014 in February we expect the full year contribution from annuity new business to reduce by between £10m-£15m and the contribution from asset liability management to reduce by between £30m-£40m compared to full year 2014.

Fee-based revenue, however, continues to grow, rising from £288m in H1 2014, to £402m for the H1 2015.

“UK and Europe operating profit was down 22%, impacted by expected lower spread/risk margin given the current low yield environment and the 2014 Budget changed to the pension regime,” the firm said.

Outgoing CEO, David Nish said: “Our UK fee based propositions continue to build momentum with regular contributions into our workplace pensions up 15%. 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.

”Overall, the group saw pre-tax operating profit rise 6% to £290m after a £39m reduction in the spread risk margin. The group announced an interim dividend of 6.02p, up 7.5%.

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