Shares in Standard Life rose 3.4 per cent in early trading, after it posted figures showing pre-tax operating profit grew 19 per cent to £604m in 2014, as assets under management jumped 38 per cent to £296.6bn.
The purchase of Ignis Asset Management helped fee-based revenue rise 14 per cent to £1.4bn, while the company – the UK's fourth-largest insurer – said it had added 340,000 new customers through auto-enrollment during the period, bringing its total to 560,000.
Meanwhile, annuity sales were 66 per cent lower reflecting changes to pensions.
The company set its final dividend at 11.43 pence, up 7.8 per cent on last year.
Why it's interesting
A radical shake-up of the pensions market has influenced the insurance market and Standard Life, like others, means it is having to reduce its reliance on the sale of annuities.
But the company seems to have found another niche: it said it expects to gain one million corporate pension customers as a result of auto-enrollment by 2017.
The insurer gave a cash windfall to shareholders of £1.75bn after the surprise sale of Canadian Insurer Manulife last September.
What Standard Life said
Following changes announced in the Budget in March 2014, we have seen a significant reduction in demand for individual annuities and consequently expect a step down in the profitability of our spread/risk business in the coming years. In 2015, we expect the contribution from annuity new business to reduce by between £10m-£15m and the contribution from asset liability management to reduce by between £30m-£40m.
Chief executive David Nish added:
We have made good strategic progress during the year with the acquisition of Ignis Asset Management and the sale of our Canadian operations increasing focus on fee business and enabling a £1.75bn return to shareholders. We are also well positioned to deal with the far-reaching reforms to the savings and retirement income rules in the UK and to support customers through these changes. Standard Life Investments has continued to perform strongly and expand internationally.
Although investment markets are unsettled and may affect the near-term pace of asset and revenue growth, we are very well placed for the future. We have an excellent track record of succeeding in evolving markets and have the products, experience and proven investment performance to help our customers and clients in all of our markets to save and invest, so that they can look forward to their financial futures with confidence.
Standard Life has reduced its reliance on annuities and rolled with the regulatory punches by expanding its UK business further and with a greater focus on asset management.