Standard Life to unveil windfalls

Standard Life hopes to scrap its once-cherished mutual status

Standard Life policyholders are to be told what they could stand to gain by backing its plans to go public.

The Scottish mutual insurer needs 75% of its 2.4 million members to accept plans to demutualise as part of a £5bn stock market flotation.

It is expected that members will be offered windfalls averaging £1,000, and possibly shares at a discounted price.

The pledges are expected in a 80-page pack delivered to policyholders on Tuesday ahead of the vote next month.

The Scottish insurer is also expected to detail a major loss in 2004, and a 2005 recovery helped by 3,500 job cuts.

We need to understand how much capital will be raised and what are the prospects for Standard Life in its reformed condition Ned Cazalet Life insurance analyst

Analysts said the insurer would be releasing its results over the last two years to give an indication of past errors as well as future strategy.

A strong turnout in May is likely to be seen as a vote of confidence in management including CEO Sandy Crombie, who announced the plans after a strategic review in 2004.

However, the insurer faces stiff competition in the sector and its 2005 UK sales were sluggish in comparison to sales at Friends Provident and Prudential.

Life insurance analyst Ned Cazalet said investors would want to see clear evidence that Standard Life was on track to turn itself around since it was badly hit by a stock market fall between 2000 and 2003.

Mutuals' decline

He said: "First of all we need to understand the structure of the demutualisation, how much capital will be raised and what are the prospects for Standard Life in its reformed condition.

"Everything else is down to price, sentiment and execution."

The listing, expected in July if May's vote is positive, will also mark the end of an era for Britain's mutuals, most of which have been floated or were sold to listed firms to improve funding.

Standard Life shocked rivals and customers two years ago when it announced plans to go public.

The u-turn angered some members of the Scottish group, which only four years previously spent over £10m to preserve its mutual status. At that point, its value was estimated at up to £18bn.