Standard Life today revelled in its “Steady-Eddie” status, revealing a surge in profits that allows it to pay a one-off £302 million windfall to investors.
Those investors include tens of thousands who were customers of the formerly mutual insurance company when it joined the stock market in 2006 at a price of 230p.
They got “free” shares in return for giving up mutuality, but it hasn’t always looked like a good deal since then with the company struggling to find its feet and the shares going nowhere helpful, at least until last year.
Today chief executive David Nish was able to announce a special dividend and offer strong vindication of his approach, which has been to be “reassuringly boring”.
Operating profit for 2012 jumped 65% to £900 million, and funds under management soared by nearly £20 billion to £218 billion. While rivals such as Aviva and Prudential have looked to overseas ventures to expand, Standard Life has remained focussed on its core UK market.
Standard was ahead of its main rivals when it began phasing out commission payments to middlemen in 2006 and is seen as one of the main beneficiaries of regulatory changes coming in this year that ban such payments.
The pensions specialist is also expected to gain from new rules which automatically enrol workers into company retirement schemes.
The profits were well ahead of City analysts’ forecasts, with some of them remaining sceptical about the company’s long-term prospects.
James Pearce at UBS regards the shares as a Sell, claiming they are worth only 270p.
That compares to a share price today of 375.5p, at which level the company is valued at £8.9 billion.
The special dividend of 12.8p a share comes on top of the regular payout of 14.7p, which is also up 6.5%.
Nish said: “Standard Life has delivered a substantial increase in profitability and has a strong capital position supporting increased dividends to our shareholders.”
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He added: “We have been building strong positions in our core markets. In the UK we are ready to benefit from the significant changes to the market and the increased customer need for savings products. Standard Life has undergone considerable change over the past three years. As a result we now have significant opportunities for further strong and sustainable growth.”
