Standard Life, the Scottish-based mutual life insurance company, is facing a battle over demutualisation.

A group of policy holders, lead by Standard Life member Fred Woollard, want the company to float on the stock market and have demanded a special meeting to vote on the proposal.

They say that Standard Life's with-profits policy holders could receive windfalls of around £5,000 each if the plan goes ahead.

Standard Life could be worth as much as £12bn to £15bn. The company has recently launched a direct-banking operation, and also has an investment business.

It is the largest mutual insurance company in Britain, with over £70bn in assets.

Standard Life staff would also gain around £16,000 each, according to the Standard Life Members Action Group.

And the action group says it would donate up to £150m to Standard's registered charity if it won the demutualisation battle.

Standard said it intended to fight to maintain its mutual status.

In a statement, its board said:

"The board regularly reviews Standard Life's mutual status to ensure that it is appropriate for our business. The board remains fully committed to mutuality."

Momentum growing

The insurance company says it will be checking on the validity of the 50 signatures which have been submitted to request the meeting.

Standard has also barred applicants from new insurance policies from receiving any windfalls from demutualisation within three years of the policies being taken out.

But despite this defence, there appears to be growing momentum for demutualisation and merger.

One of the other big Scottish life insurance companies, Scottish Widows, was sold to Lloyds TSB last year, while Perth's General Accident merged with Commercial Union.

Pressure group

A wave of demutualisations by UK building societies shows little sign of slowing down, although the biggest society, the Nationwide, has beaten off the carpetbaggers for now.

The group organising campaigns for the remaining building societies to demutualise, Carpetbagger.com, said it was not behind the Standard Life resolution.

"There is no current campaign by Carpetbagger.com at any mutual life insurer," commented Richard Yellin.