UK - The UK's Financial Services Authority has welcomed steps taken by Standard Life to strengthen its capital position which include examining flotation, a reversal of its policy four years ago when it rejected an attempt to force it to float by carpetbagger Fred Woollard.
The Scottish mutual also announced the appointment of Sandy Crombie (pictured) as group chief executive, replacing Iain Lumsden who retires after 36 years’ service. Crombie has been chief executive of Standard Life Investments since it was formed in 1998.
In a statement, the FSA said: “Since the company first notified the regulator of the significant divergence in its calculation of liabilities and subsequently the higher level of reserving needed against the likely cost of guarantees, both parties have worked together to address the issues raised.”
Standard Life said it “will no longer project forward in policyholders’ illustrations certain discretionary benefits that it may nevertheless ultimately be able and prepared to pay.”
Standard Life’s latest accounts show a fund for future appropriations, a key measure of solvency, of £4.5bn for the year to 15 November 2003. This compares with £3.2bn in the previous year. The figures also reveal available assets of £4.6bn compared with £4.2bn as of 15 November 2002.
To support future growth, Standard Life plans raising £750m of hybrid capital.
The FSA will now commission a review by independent experts into the origins and implications of the divergence between the most recent calculation of the aggregate value of liabilities on outstanding policies using asset shares and earlier calculations.
It will consider further, with the industry, possible developments of the FSA’s proposals for reserving against the cost of guarantees in policies by the use of modern financial risk evaluation techniques.
The Pensions and Lifetime Savings Association (PLSA) is in the process of convening an industry-wide group to take forward the work of the Institutional Disclosure Working Group (IDWG).
The Transfers and Re-registration Industry Group (TRIG) has given its support to an initiative which aims to complete occupational pension transfers within three weeks.
Scottish Widows has completed a bulk annuity deal for the Hitachi UK Limited Pension Scheme.