Standard Life considers demutualising as 1,000 jobs cut

Stricken insurer Standard Life is to cut around 1,000 by the end of the year and will demutualise as part of an ongoing strategic review.

The company said that the UK Life and Pensions business is to be repositioned to achieve "profitable growth", and in doing so will require a 20% reduction in costs and a reduction in overall job numbers of around 1,000 by end 2004.

The job losses will come about through a combination of natural attrition, the phasing out of some temporary contracts and redundancies. The Standard Life staff association (LINK) has been, and will continue to be, involved in this process, the company said.

The Board also agreed that demutualisation was, "in principle", the best option and was in the best interests of the company and its policyholders. The demutualising proposal will be put to members by the 2006 Annual General Meeting (AGM), the board said.

In a statement the company said: "Demutualisation will maximise the value of the company and enable it to deliver performance, reduce risk and crystallise value for members. The company will now rapidly assess the detailed requirements for demutualisation and an implementation plan will be developed for approval by the Board."

However, sales in UK businesses continue to "perform well in challenging conditions," with the Bank, Healthcare and Investments strongly ahead year on year, and UK Life and Pensions close to sales plan for the year, the company said.

Announcing the interim conclusions of the strategic review, Sandy Crombie, Group Chief Executive said today: “The strategic review has confirmed that the Group has a well diversified portfolio of businesses, which have good potential for growth. However, we need to make significant changes to our UK Life and Pensions business to reduce costs and write more profitable business. While this will mean job losses, the business must be in shape to compete successfully in the market for long-term financial services."

The review has revealed that over the last two years, 'with profits' products have declined from 40% of new business sales two years ago, to just under 20% today.

"This means a smaller proportion of our customer base is bearing a larger proportion of the business risk of the company. In parallel, the capital requirements of with profits business have increased to the point where Standard Life is becoming increasingly capital constrained," Mr Crombie said.

(gmcg)