Standard Life shares fall due to lower annuity sales

Shares in Standard Life closed down 3.1% on Tuesday after a drop in annuity business dampened profits for the insurer and asset manager.

The group said first-half pre-tax operating profit rose 6% to £290m.

However, it reported a £39m fall in its spread/risk margin, compared with the previous year, as a result in part of lower annuity sales.

This year the pressure for retirees to use their pension pots to buy an annuity was lifted completely.

In a trading statement, the Edinburgh-based company said it expected annuity new business to drop by between £10m and £15m this year, with asset liability management falling by £30m-£40m, compared with 2014.

Standard Life has been switching focus to "fee-based" business, such as more flexible drawdown pensions, and its asset management arm.

The group added 120,000 new customers in the UK through auto-enrolment in the first half, contributing to a 15% increase in regular contributions into workplace pensions.

Meanwhile, assets under administration rose 2% from December 2014 to £302.1bn, which the company said had been driven by increased demand for its investment solutions and the acquisition last year of fund manager Ignis Asset Management.

The insurer said it would pay a dividend of 6.02p per share, an increase of 7.5%.

Outgoing chief executive David Nish said: "Standard Life has performed well during the first half of 2015 driven by a focus on providing value for our customers, clients and shareholders.

"We have increased the assets that we administer on behalf of our customers to £302bn helped by strong demand for our propositions."

He added: "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."

Mr Nish is due to stand down on Wednesday, and will be replaced by Keith Skeoch, currently head of Standard Life Investments.

Shares fell 14.1p to 440.3p, valuing the company at £8.6bn.