Standard Life prepares to flog £16bn annuity book once Aberdeen deal is done

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Chief executive Keith Skeoch said selling Standard Life's legacy book did not mean the firm was exiting the insurance sector (Source: Getty)

Standard Life is ready to jettison its £16.1bn annuity book once shareholders have rubber-stamped the firm’s merger with Aberdeen Asset Management.

But plans to sell its legacy business does not mean exiting insurance all together, chief executive Keith Skeoch said today.

"It is the most capital-heavy part of our business, so I would be quite happy to dispose of that book of business if I can get benefit for shareholders,” said Skeoch, according to reports by Reuters.

"However, at this level of interest rates, the capital would tend to go with the book [and] pricing is quite tight because there are quite a lot of books for sale."

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There are a comparatively small number of sizable annuity aggregators in the UK, with numbers in single-digits. And the prospect of picking up Standard Life’s business is likely to be attractive to many of them.

Specialist insurer Phoenix has been particularly active in the market in recent years and it is understood a transaction with Standard Life would meet its acquisition criteria.

The FTSE 250 firm bought Abbey Life’s £10bn portfolio from Deutsche Bank late last year. Earlier in 2016 it stumped up £610m to buy Sun Life’s £12.3bn annuity book from Axa.

Other interested parties are likely to include Rothesay Life and the Pension Insurance Corporation.

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However, Skeoch said the whole of Standard Life’s £88.8bn back-book insurance assets were not likely to be put on the market.

He said:

There may well be bits of our back book where there isn't a future retail component.

[But] it's not as simple as some people think, that you simply flog off life and pensions; these are actually very, very attractive books of business.

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