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Standard Life plc - Interim Management Statement

RNS Number : 9995G Standard Life plc 30 October 2008 Standard Life plc Interim Management Statement - nine months to 30 September 2008 30 October 2008 Strong net flows in testing market conditions * Worldwide life and pensions net inflows of #2.3bn1 (2007: #2.4bn) * Worldwide third party net investment inflows, excluding money market funds, of #3.2bn (2007: #4.8bn) New business sales demonstrate robust business model * Worldwide life and pensions sales marginally higher at #12.4bn (2007: #12.3bn) Balance sheet resilient * FGD surplus of #3.4bn at 30 September 2008 (30 June 2008: #3.5bn) * A further 40% fall in equity markets from 30 September 2008 would result in an FGD surplus of #1.9bn Group Chief Executive Sandy Crombie said: 'I am pleased to report that Standard Life has produced a solid performance in the first nine months of 2008, despite the market turbulence. The conservative investment management policies we have adopted over the past few years have resulted in a balance sheet that is both strong and resilient. 'While markets are volatile and may remain that way for some time, we are well positioned to continue to attract institutional and retail assets due to our innovative product set, excellence in customer service and strong distribution relationships.' Unless otherwise stated, all sales figures are on a PVNBP basis and all comparisons are in sterling and with the nine months ending 30 September 2007. Strong net flows in testing market conditions Total net flows across our Worldwide life and pensions operations1 were only 2% lower at #2.3bn, the strong growth in our international operations offsetting the continued difficult market conditions in the UK. UK life and pensions net flows were 15% lower at #1.7bn. Within this total, net Pensions flows excluding volatile Institutional TIP flows were 2% lower at #1.3bn (2007: #1.4bn), reflecting reduced transfer values. In Savings and investments there was a net outflow of #243m (2007: net outflow of #99m) due to lower Investment bond sales that were affected by market uncertainty and recent CGT changes. Against this, we have seen continued strong growth in Offshore bond net inflows. Claims levels across our pensions and with profits portfolios continue to trend downwards and are within long-term assumptions. Claims levels of unit-linked bonds remain consistent with the short-term lapse provision set up at the 2007 year-end. In Europe, net flows strengthened by 7% to #351m, due to higher German net inflows from regular premium business. Canadian net flows of #292m have increased by 371%, reflecting higher inflows across Group savings and retirement products, which exceeded scheduled annuity payments. Standard Life Investments has performed well during the period despite the economic uncertainty, with worldwide third party investment net inflows of #1.7bn (2007: #6.1bn). Excluding volatile flows into our money market funds, inflows were #3.2bn (2007: #4.8bn). New business sales demonstrate robust business model UK Financial Services UK life and pensions sales of #9.8bn were 5% lower in the first nine months of 2008, driven by a 6% decrease in pension sales against a strong prior year comparator. Due to normal seasonality across our key product lines, the third quarter is traditionally the weakest of the year. During this quarter, life and pensions sales were 14% lower at #2.6bn (2007: #3.1bn), the impact of expected seasonal trends exaggerated by lower transfer values. Consistent with our strategy to manage our mortgage exposure, gross mortgage lending decreased by 65% to #0.9bn (2007: #2.7bn). Healthcare sales increased by 19% on an APE basis to #19m (2007: #16m). Individual SIPP funds under administration increased by 13% to #8.7bn2 (31 December 2007: #7.7bn), as the impact of net inflows of #1.9bn (2007: #2.7bn) was partly offset by a market-driven reduction in underlying asset values. During the period SIPP customer numbers increased by 30% to 61,000 (31 December 2007: 46,900) with average case sizes across our SIPP portfolio of #142,000 at the end of September (31 December 2007: #164,000). Individual SIPP sales of #2.9bn were 19% lower than a strong prior year period that reflected heightened activity post A-day. Third quarter sales were 20% lower at #815m. This is largely due to the impact of market movements on average incoming transfer values, which continue to represent the majority of total SIPP sales. Group pensions sales increased by 10% to #2.3bn, reflecting strong levels of new and incremental business and a large scheme (#224m) won during the first quarter. Group SIPP volumes increased by 31% and accounted for 31% of total Group pensions sales (2007: 26%). At 30 September 2008, UK Group pensions funds under management were #14.6bn (31 December 2007: #15.0bn), the strong growth in new business volumes being offset by negative market movements. Savings and investments sales increased by 2% to #2.1bn, though the third quarter saw a drop of 29% in the face of the turbulent market environment. The continued popularity of our retail portfolio bond helped increase Offshore bond sales by 158%. Sales of Mutual funds sold on our Wrap and Fundzone platforms increased by 21% to #493m. However, sales of Investment bonds continued to be impacted by the combination of market uncertainty and the changes in CGT rules and were 20% lower at #1.2bn. At 30 September 2008, funds under administration on Standard Life's Wrap platform had increased by 45% to #1.6bn (31 December 2007: #1.1bn). At the end of the quarter there were 334 IFA firms using the platform (31 December 2007: 209 firms) and 14,300 customers (31 December 2007: 8,100 customers) with an average fund size of #114,000 (31 December 2007: #133,000). At 30 September 2008 mortgages under management stood at #10.1bn (31 December 2007: #11.3bn), with an arrears rate of 0.30%, which is a fifth of the Council of Mortgage Lenders industry average reported at 30 June 2008. Savings balances in our banking operations continue to increase with total savings balances at 30 September 2008 of #4.8bn (31 December 2007: #4.6bn). This total includes combined SIPP and Wrap balances of #1.3bn (31 December 2007: #0.6bn). Europe Life and pensions sales in Europe were 29%3 lower with the third quarter trend broadly matching this rate. In Ireland, sales of #228m were 44%3 lower, driven by decreasing property prices and a weak domestic stock market. Sales in Germany of #402m were 16%3 lower and were affected by changes in insurance contract regulations introduced at the beginning of the year and the recent introduction of transparency rules. Canada Canadian sales continue to grow following the successful repositioning of the business. Canadian new business increased by 32%3 to #1.6bn despite the adverse impact of the recent financial crisis on retail sales, which has reduced the overall growth reported in the third quarter to 1%. Sales of Group savings and retirement products benefited from a number of mid-size mandates and a large defined benefit administration mandate secured in the second quarter. Stronger sales in Group insurance reflect our continued success in the disability insurance segment. Asia Pacific We have continued to see strong growth within our Indian and Chinese joint ventures and our Hong Kong operation. Combined sales across these operations increased by 31%3,4 on a PVNBP basis to #413m and by 74%3,4 on an APE basis to #91m despite volatile market conditions. In India, sales increased by 18%3,4 on a PVNBP basis and by 66%3,4 on an APE basis. Standard Life's share of these sales was #315m (2007: #147m). The number of financial consultants appointed by the joint venture has increased to approximately 188,000 (31 December 2007: 132,000). In China, sales volumes increased by 81%3 on both a PVNBP and an APE basis, reflecting strong growth in group products and in bank distribution and continued business expansion in major cities within existing provinces. Standard Life's share of these sales was #66m (2007: #33m). New business sales in Hong Kong were #32m (2007: #13m), representing an increase of 137%3 on a PVNBP basis and 245%3 on an APE basis. Standard Life Investments Third party funds under management remained resilient in the face of extremely volatile markets, decreasing by 6% to #44.7bn (31 December 2007: #47.7bn) during the nine month period in which the FTSE All Share Index fell by 24%. Total funds under management decreased by 14% to #123.6bn (31 December 2007: #143.4bn). Excluding the impact of the UK annuity reinsurance transaction, which reduced funds under management by #6.7bn, total funds under management reduced by 10%. Money weighted average investment performance over 3, 5 and 10 year periods continues to be comfortably above median and remains a key driver of our strong institutional sales and pipeline. The strength of performance across a range of OEICs and Unit trusts is demonstrated by the high proportion of eligible funds, (19 out of 24), rated 'A' or above by Standard & Poor's. Balance sheet resilient The Financial Groups Directive (FGD) surplus of #3.4bn at 30 September 2008 (30 June 2008: #3.5bn, 31 December 2007: #3.6bn) has been insensitive to equity market movements, with a period end solvency cover of 223% (30 June 2008: 206%, 31 December 2007: 166%). The insensitivity of the FGD surplus reflects the structure of the Group post Demutualisation as well as the extensive hedging strategy in place. Our FGD surplus is still strong in the event of further market weakness. #bn FGD surplus at 30 September 2008 3.4 A further 20% fall in equity markets 3.3 A further 30% fall in equity markets 2.6 A further 40% fall in equity markets 1.9 The Heritage With Profits Fund had a residual estate of #0.9bn at 30 September 2008 (30 June 2008: #1.2bn, 31 December 2007: #1.5bn). In order to maintain fairness for all with profits policyholders, Standard Life announced a reduction to final bonuses and an increase in market value reductions for certain with profit policies on 29 October 2008. We have put in place a number of measures to manage our mortgage exposure during the ongoing period of difficult credit market conditions, and these led to net outflows of #1.2bn from our mortgage business. Following the second maturity from the Lothian securitisation programme, which took place on 24 October 2008, there are no securitisation maturities until 2011. Our banking operation remains well capitalised with a very high quality mortgage book, has access to a diverse range of funding sources and has actively reduced its funding requirements during the year. Acquisition of Vebnet On 16 September 2008 Standard Life announced that agreement had been reached on a #24.2m cash offer to acquire the entire issued and to be issued share capital of Vebnet (Holdings) plc. Following the satisfaction of all relevant terms this offer became wholly unconditional on 10 October 2008. Vebnet has a well established position in the UK employee benefits and online reward market and has developed business activities in Europe and Asia. Vebnet has 145 corporate clients and 293,000 employee users of its flexible benefits proposition. The transaction is consistent with Standard Life's strategy to accelerate the development of its corporate business through strengthening its customer base, opening up new routes to market and developing its existing product range. Standard Life group outlook Conditions across all our markets remain difficult with the combination of weakening economic conditions and an unprecedented level of dislocation in financial markets. Retail investors are likely to remain cautious, preferring to allocate their funds to cash and lower risk assets. Institutional mandates are still expected to grow, albeit at a lower level than the rate of growth seen over the past five years. Standard Life remains strong and is well-positioned to weather the difficult market and economic conditions. For further information please contact: Institutional Equity Investors: Gordon Aitken 0131 245 6799 Duncan Heath 0131 245 4742 Paul De'Ath 0131 245 9893 Retail Equity Investors: Computershare 0845 113 0045 Media: Barry Cameron 0131 245 6165 / 07712 486 463 Nicola McGowan 0131 245 4016 / 07782 191341 Neil Bennett (Maitland) 020 7379 5151 / 07900 000 777 Debt Investors: Andy Townsend 0131 245 7260 Notes to Editors 1. Worldwide life and pensions net inflows do not include net inflows in respect of our Asia Pacific joint ventures and our Hong Kong subsidiary. 2. Analysis of Individual SIPP funds under administration. 30 Sep 31 Dec Change 2008 2007 #m #m #m % Insured Standard Life funds 2,655 2,752 (97) (4) Insured external funds 1,485 1,671 (186) (11) Collectives - Standard Life Investments 905 834 71 9 Collectives - Funds Network 680 603 77 13 Cash 839 484 355 73 Non collectives 2,092 1,332 760 57 Total 8,656 7,676 980 13 Insured 4,140 4,423 (283) (6) Non-insured 4,516 3,253 1,263 39 Total 8,656 7,676 980 13 Of the #8.7bn funds under administration at 30 September 2008, #0.7bn relate to funds on the Wrap platform. 3. Comparisons for our International businesses are given on a constant currency basis. 4. The growth percentages quoted for India, Asia Pacific life and pensions and Total worldwide life and pensions reflect the growth in sales in HDFC Standard Life Insurance Limited, rather than the growth in Standard Life's share of the joint venture. Sales quoted reflect Standard Life's share of the joint venture. 5. There will be a conference call today for newswires and online publications at 8.00am hosted by David Nish, Group Finance Director, Keith Skeoch, Chief Executive of Standard Life Investments, and Paul Matthews, Managing Director of Distribution for UK Financial Services. Dial in telephone number +44 (0)20 7162 0025. Callers should quote Standard Life Media Call. 6. There will be a conference call today for investors and analysts at 9.30am hosted by David Nish, Group Finance Director, Keith Skeoch, Chief Executive of Standard Life Investments, and Paul Matthews, Managing Director of Distribution for UK Financial Services. Dial in telephone number +44 (0)20 7162 0025. Callers should quote Standard Life Analysts & Investors Call. The conference ID number is 811976. A recording of this call will be available for replay for one week by dialing +44 (0)20 7031 4064 (access code 811976). Insurance Operations net flows (Regulatory Basis) 9 months ended 30 September 2008 Gross inflows Redemptions Net inflows Gross inflows Redemptions Net inflows 9 months to 9 months to 9 months to 9 months to 9 months to 9 months to 30 Sep 30 Sep 30 Sep 30 Sep 30 Sep 30 Sep 2008 2008 2008 2007 2007 2007 #m #m #m #m #m #m UK Insured pensions - 1,510 (924) 586 1,553 (836) 717 institutional Insured pensions - other 4,451 (4,386) 65 5,424 (5,115) 309 Non-insured pensions (a) 1,523 (249) 1,274 1,199 (146) 1,053 Total pensions 7,484 (5,559) 1,925 8,176 (6,097) 2,079 Life products 1,704 (2,800) (1,096) 2,094 (2,718) (624) Offshore bonds 468 (48) 420 168 (6) 162 Mutual Funds (b) 450 (17) 433 363 - 363 Total savings and investments 2,622 (2,865) (243) 2,625 (2,724) (99) UK life and pensions 10,106 (8,424) 1,682 10,801 (8,821) 1,980 Europe Ireland 256 (376) (120) 359 (433) (74) Germany 520 (49) 471 436 (33) 403 Europe life and pensions 776 (425) 351 795 (466) 329 Canada Group Savings and Retirement 1,135 (827) 308 787 (783) 4 Individual Insurance, Savings 314 (475) (161) 314 (432) (118) and Retirement Group Insurance 228 (135) 93 190 (114) 76 Mutual Funds (b) 180 (128) 52 214 (114) 100 Canada life and pensions 1,857 (1,565) 292 1,505 (1,443) 62 Total worldwide life and 12,739 (10,414) 2,325 13,101 (10,730) 2,371 pensions excluding Asia Pacific (a) UK Pensions net flows include the non-insurance element of SIPP product, which is also included within UK Mutual Fund net flows in the third party Investment Operations figures. (b) The Mutual Funds net flows are also included within Mutual Fund net flows in the third party Investment Operations figures. Insurance operations new business 9 months ended 30 September 2008 Single Premiums New Regular Premiums PVNBP 9 months to 30 Sep 9 months to 30 Sep 9 months 9 months 9 months 9 months to 30 Sep Change Change 2008 2007 to 30 Sep 2008 to 30 Sep to 30 Sep 2008 2007 (f) in constant currency 2007 (f) (g) #m #m #m #m #m #m % % UK Insured SIPP & Drawdown 991 2,001 26 42 1,124 2,222 (49%) (49%) Non-insured SIPP (a) 1,620 1,277 29 17 1,765 1,355 30% 30% Individual SIPP 2,611 3,278 55 59 2,889 3,577 (19%) (19%) Individual Pensions (b) 472 531 26 30 571 660 (13%) (13%) Group Pensions (b) 868 825 353 337 2,292 2,086 10% 10% Institutional Pensions 1,410 1,471 60 - 1,554 1,471 6% 6% Pensions 5,361 6,105 494 426 7,306 7,794 (6%) (6%) Investment Bonds 1,186 1,488 - - 1,186 1,488 (20%) (20%) Offshore Bonds 433 168 - - 433 168 158% 158% Mutual Funds (c) 443 363 7 6 493 406 21% 21% Savings and Investments 2,062 2,019 7 6 2,112 2,062 2% 2% Annuities 361 381 - - 361 381 (5%) (5%) Protection - - 2 3 6 19 (68%) (68%) UK life and pensions 7,784 8,505 503 435 9,785 10,256 (5%) (5%) Europe Ireland 182 290 9 15 228 354 (36%) (44%) Germany 30 40 36 35 402 417 (4%) (16%) Europe life and pensions 212 330 45 50 630 771 (18%) (29%) Canada Group Savings and Retirement 503 258 33 17 943 481 96% 77% Individual Insurance, Savings 236 237 1 2 252 262 (4%) (13%) and Retirement Group Insurance (d) - - 26 15 187 112 67% 50% Mutual Funds (c) 180 214 - - 180 214 (16%) (24%) Canada life and pensions 919 709 60 34 1,562 1,069 46% 32% Asia Pacific India (e) 12 4 73 24 315 147 22% (h) 18% (h) China (e) 45 24 5 2 66 33 100% 81% Hong Kong 8 6 6 1 32 13 146% 137% Asia Pacific life and pensions 65 34 84 27 413 193 35% (h) 31% (h) Total worldwide life and 8,980 9,578 692 546 12,390 12,289 - (h) (2%) (h) pensions (a) Non-insurance element of SIPP is also included within UK Mutual Funds cash inflows in the Investment Operations figures. (b) Single premiums include Department of Work and Pensions rebate premiums of #272m (2007: #231m), comprising Individual Pension rebates of #148m (2007: #132m) and Group Pensions rebates of #125m (2007: #99m). (c) 9 months ended 30 September 2007 have been re-stated to include certain Mutual Funds. The Mutual Funds new business sales are also included within Mutual Funds cash inflows in the Investment Operations figures. (d) Canada Group Insurance includes #2.4m of new regular premiums in respect of Consultaction policies, representing the comparable full premium for #0.3m of new annualised fee income. (e) Standard Life's share of the joint venture company's new business except as noted in (h) below. (f) % change is calculated on the figures rounded to millions. (g) Calculated using constant rates of exchange. (h) Calculated based on the percentage movement in the new business of HDFC Standard Life Insurance Company Limited as a whole to avoid distortion due to changes in the Group's shareholding in the joint venture during 2007. (i) New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 9 months to 30 September 2008 were #1:C$1.98 (2007: #1:C$2.19) and #1:EUR1.29 (2007: #1:EUR1.48). Insurance operations new business continued 9 months ended 30 September 2008 APE 9 months 9 months Change to 30 Sep to 30 Sep Change in constant 2008 2007 (f) currency (f) (g) #m #m % % UK Insured SIPP & Drawdown 125 242 (48%) (48%) Non-insured SIPP (a) 191 144 33% 33% Individual SIPP 316 386 (18%) (18%) Individual Pensions (b) 74 83 (11%) (11%) Group Pensions (b) 440 420 5% 5% Institutional Pensions 201 147 37% 37% Pensions 1,031 1,036 - - Investment Bonds 118 149 (21%) (21%) Offshore Bonds 43 17 153% 153% Mutual Funds (c) 52 42 24% 24% Savings and Investments 213 208 2% 2% Annuities 37 38 3% 3% Protection 2 3 (33%) (33%) UK life and pensions 1,283 1,285 - - Europe Ireland 28 44 (36%) (46%) Germany 39 39 - (14%) Europe life and pensions 67 83 (19%) (31%) Canada Group Savings and Retirement 83 42 98% 77% Individual Insurance, Savings 25 26 (4%) (14%) and Retirement Group Insurance (d) 26 15 73% 55% Mutual Funds (c) 18 21 (14%) (23%) Canada life and pensions 152 104 46% 31% Asia Pacific India (e) 74 25 70% (h) 66% (h) China (e) 10 5 100% 81% Hong Kong 7 2 250% 245% Asia Pacific life and pensions 91 32 82% (h) 74% (h) Total worldwide life and 1,593 1,504 5% (h) 3% (h) pensions (a) Non-insurance element of SIPP is also included within UK Mutual Funds cash inflows in the Investment Operations figures. (b) Single premiums include Department of Work and Pensions rebate premiums of #272m (2007: #231m), comprising Individual Pension rebates of #148m (2007: #132m) and Group Pensions rebates of #125m (2007: #99m). (c) 9 months ended 30 September 2007 have been re-stated to include certain Mutual Funds. The Mutual Funds new business sales are also included within Mutual Funds cash inflows in the Investment Operations figures. (d) Canada Group Insurance includes #2.4m of new regular premiums in respect of Consultaction policies, representing the comparable full premium for #0.3m of new annualised fee income. (e) Standard Life's share of the joint venture company's new business except as noted in (h) below. (f) % change is calculated on the figures rounded to millions. (g) Calculated using constant rates of exchange. (h) Calculated based on the percentage movement in the new business of HDFC Standard Life Insurance Company Limited as a whole to avoid distortion due to changes in the Group's shareholding in the joint venture during 2007. (i) New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 9 months to 30 September 2008 were #1:C$1.98 (2007: #1:C$2.19) and #1:EUR1.29 (2007: #1:EUR1.48). Investment operations 9 months ended 30 September 2008 Opening FUM Gross Inflows Redemptions Net Inflows Market & other Net movement in FUM Closing FUM 1 Jan 2008 movements 30 Sep 2008 #m #m #m #m #m #m #m UK Mutual Funds (a) 6,020 925 (b) (868) 57 (1,289) (1,232) 4,788 Private Equity 2,597 442 (23) 419 159 578 3,175 Segregated Funds 10,724 2,621 (434) 2,187 (1,338) (c) 849 11,573 Pooled Property Funds 589 42 - 42 299 (c) 341 930 Total UK 19,930 4,030 (1,325) 2,705 (2,169) 536 20,466 Canada Mutual Funds (a) 1,540 185 (e) (132) 53 (167) (114) 1,426 Separate Mandates (d) 1,660 136 (238) (102) (82) (184) 1,476 Total Canada 3,200 321 (370) (49) (249) (298) 2,902 International Europe 83 398 (25) 373 10 383 466 Asia (excluding India) 124 3 (31) (28) (35) (63) 61 India 2,476 219 (f) - 219 (418) (199) 2,277 Total International 2,683 620 (56) 564 (443) 121 2,804 Total worldwide investment products excluding money market funds 25,813 4,971 (1,751) 3,220 (2,861) 359 26,172 Money market funds (g) 6,082 - (1,489) (1,489) (321) (1,810) 4,272 Total worldwide investment products 31,895 4,971 (3,240) 1,731 (3,182) (1,451) 30,444 Total third party funds under management (FUM) comprise the investment business noted above together with third party insurance contracts. New business relating to third party insurance contracts is disclosed as insurance business for reporting purposes. An analysis of total third party funds under management is shown below. Opening FUM Gross Inflows Redemptions Net Inflows Market & other Net movement in FUM Closing FUM 1 Jan 2008 movements 30 Sep 2008 #m #m #m #m #m #m #m Third Party Investment 31,895 4,971 (3,240) 1,731 (3,182) (1,451) 30,444 Products Third Party Insurance 15,805 2,040 (1,323) 717 (2,220) (c) (1,503) 14,302 Contracts (new business classified as insurance products) Total third party funds under 47,700 7,011 (4,563) 2,448 (5,402) (2,954) 44,746 management Standard Life Investments - 143,396 123,620 (h) total funds under management (a) Included within Mutual Funds are cash inflows which have also been reflected in UK and Canada Mutual Fund new business sales. (b) In the 9 months to 30 September 2007 UK Mutual Funds gross inflows were #2,011m and net inflows were #1,401m. (c) Included within market and other movements there is an internal reclassification between Property (#368m increase), Third Party Insurance contracts (#463m decrease) and Segregated Funds (#95m increase). (d) Separate Mandates refers to investment funds products sold in Canada exclusively to institutional customers. These products contain no insurance risk and consist primarily of defined benefit pension plan assets for which Standard Life Investments exclusively provides portfolio advisory services. (e) In the 9 months to 30 September 2007 Canadian Mutual Funds gross inflows were #208m and net inflows were #100m. (f) International gross inflows include India where, due to the nature of the Indian investment sales market, the new business is shown as the net of sales less redemptions. (g) Due to the nature of the money market funds, the flows shown are calculated using average net client balances. Other movements are derived as the difference between these average net inflows and the movement in the opening and closing FUM. (h) Closing FUM reflects the transfer out of #6.7bn of FUM in relation to UK immediate annuity liabilities to Canada Life International Re, reflecting the reinsurance agreement disclosed in the press release dated 14 February 2008. (i) Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 30 September 2008. Investment fund flows are translated at average exchange rates. Gains and losses arising from the translation of funds denominated in foreign currencies are included in the market and other movements column. The principal closing exchange rates used as at 30 September 2008 were #1: C$1.90 (31 December 2007: #1:C$1.96) and #1:EUR1.27 (31 December 2007: #1:EUR1.36). The principal average rates for the 9 months to 30 September 2008 were #1:C$1.98 (2007: #1:C$2.19) and #1:EUR1.29 (2007: #1:EUR1.48). Insurance Operations net flows (Regulatory Basis) 3 months ended 30 September 2008 Gross inflows Redemptions Net inflows Gross inflows Redemptions Net inflows 3 months to 3 months to 3 months to 3 months to 3 months to 3 months to 30 Sep 30 Sep 30 Sep 30 Sep 30 Sep 30 Sep 2008 2008 2008 2007 2007 2007 #m #m #m #m #m #m UK Insured pensions - 629 (268) 361 522 (258) 264 institutional Insured pensions - other 1,242 (1,418) (176) 1,631 (1,662) (31) Non-insured pensions (a) 449 (85) 364 370 (56) 314 Total pensions 2,320 (1,771) 549 2,523 (1,976) 547 Life products 335 (936) (601) 650 (915) (265) Offshore bonds 176 (21) 155 86 (2) 83 Mutual Funds (b) 158 (7) 151 144 - 144 Total savings and investments 669 (964) (295) 880 (916) (38) UK life and pensions 2,989 (2,735) 254 3,402 (2,893) 510 Europe Ireland 81 (122) (41) 107 (120) (13) Germany 177 (18) 160 147 (16) 131 Europe life and pensions 258 (139) 119 254 (136) 118 Canada Group Savings and Retirement 257 (255) 2 235 (225) 10 Individual Insurance, Savings 92 (149) (57) 108 (144) (36) and Retirement Group Insurance 77 (45) 32 65 (41) 24 Mutual Funds (b) 49 (38) 11 65 (33) 32 Canada life and pensions 475 (487) (12) 473 (443) 30 Total worldwide life and 3,722 (3,361) 361 4,129 (3,471) 657 pensions excluding Asia Pacific (a) UK Pensions net flows include the non-insurance element of SIPP product, which is also included within UK Mutual Fund net flows in the third party Investment Operations figures. (b) The Mutual Funds net flows are also included within Mutual Fund net flows in the third party Investment Operations figures. Insurance operations new business 3 months ended 30 September 2008 Single Premiums New Regular Premiums PVNBP 3 months to 30 Sep 3 months to 30 Sep 3 months to 30 Sep 3 months to 30 Sep 3 months to 30 Sep 3 months to 30 Sep Change Change 2008 2007 2008 2007 2008 2007 (e) in constant currency (e) (f) #m #m #m #m #m #m % % UK Insured SIPP & Drawdown 236 572 7 11 272 624 (56%) (56%) Non-insured SIPP (a) 502 370 8 7 543 397 37% 37% Individual SIPP 738 942 15 18 815 1,021 (20%) (20%) Individual Pensions (b) 118 134 7 10 136 180 (24%) (24%) Group Pensions (b) 203 241 85 91 489 543 (10%) (10%) Institutional Pensions 590 489 - - 590 489 21% 21% Pensions 1,649 1,806 107 119 2,030 2,233 (9%) (9%) Investment Bonds 161 449 - - 161 449 (64%) (64%) Offshore Bonds 163 84 - - 163 84 94% 94% Mutual Funds (c) 151 144 2 2 169 163 4% 4% Savings and Investments 475 677 2 2 493 696 (29%) (29%) Annuities 109 124 - - 109 124 (12%) (12%) Protection - - 1 1 2 6 (67%) (67%) UK life and pensions 2,233 2,607 110 122 2,634 3,059 (14%) (14%) Europe Ireland 56 87 2 3 71 101 (30%) (40%) Germany 10 13 13 13 140 157 (11%) (23%) Europe life and pensions 66 100 15 16 211 258 (18%) (30%) Canada Group Savings and Retirement 65 67 8 7 176 142 24% 13% Individual Insurance, Savings 67 82 - - 72 90 (20%) (26%) and Retirement Group Insurance - - 9 5 64 34 88% 77% Mutual Funds (c) 49 65 - - 49 65 (25%) (29%) Canada life and pensions 181 214 17 12 361 331 9% 1% Asia Pacific India (d) 2 - 26 7 109 45 20% (g) 20% (g) China (d) 14 11 2 1 24 14 71% 50% Hong Kong 2 5 3 - 14 9 56% 45% Asia Pacific life and pensions 18 16 31 8 147 68 30% (g) 27% (g) Total worldwide life and 2,498 2,937 173 158 3,353 3,716 (11%) (g) (13%) (g) pensions (a) Non-insurance element of SIPP is also included within UK Mutual Fund cash inflows in the Investment Operations figures. (b) Single premiums include Department of Work and Pensions rebate premiums of #93m (2007: #66m), comprising Individual Pension rebates of #48m (2007: #39m) and Group Pensions rebates of #45m (2007: #27m). (c) 3 months ended 30 September 2007 have been re-stated to include certain Mutual Funds. The Mutual Funds new business sales are also included within Mutual Funds cash inflows in the Investment Operations figures (d) Standard Life's share of the Joint Venture Company's New Business except as noted in (g) below. (e) % change is calculated on the figures rounded to millions. (f) Calculated using constant rates of exchange. (g) Calculated based on the percentage movement in the new business of HDFC Standard Life Insurance Company Limited as a whole to avoid distortion due to changes in the Group's shareholding in the joint venture during 2007. (h) New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 9 months to 30 September 2008 were #1: C$1.98 (2007: #1: C$2.19) and #1: EUR1.29 (2007: #1: EUR1.48). Insurance operations new business continued 3 months ended 30 September 2008 APE 3 months to 3 months to Change 30 Sep 30 Sep Change in constant 2008 2007 (e) currency (e) (f) #m #m % % UK Insured SIPP & Drawdown 31 68 (54%) (54%) Non-insured SIPP (a) 58 43 35% 35% Individual SIPP 89 111 (20%) (20%) Individual Pensions (b) 19 23 (17%) (17%) Group Pensions (b) 105 116 (9%) (9%) Institutional Pensions 59 49 20% 20% Pensions 272 299 (9%) (9%) Investment Bonds 16 45 (64%) (64%) Offshore Bonds 16 9 78% 78% Mutual Funds (c) 18 17 6% 6% Savings and Investments 50 71 (30%) (30%) Annuities 12 12 - - Protection 1 1 - - UK life and pensions 335 383 (13%) (13%) Europe Ireland 9 12 (25%) (35%) Germany 14 15 (7%) (23%) Europe life and pensions 23 27 (15%) (28%) Canada Group Savings and Retirement 15 13 15% 4% Individual Insurance, Savings 7 9 (22%) (26%) and Retirement Group Insurance 9 5 80% 80% Mutual Funds (c) 5 6 (17%) (29%) Canada life and pensions 36 33 9% - Asia Pacific India (d) 26 8 69% (g) 70% (g) China (d) 4 3 33% 43% Hong Kong 4 1 300% 238% Asia Pacific life and pensions 34 12 65% (g) 77% (g) Total worldwide life and 428 455 (8%)(g) (9%) (g) pensions (a) Non-insurance element of SIPP is also included within UK Mutual Fund cash inflows in the Investment Operations figures. (b) Single premiums include Department of Work and Pensions rebate premiums of #93m (2007: #66m), comprising Individual Pension rebates of #48m (2007: #39m) and Group Pensions rebates of #45m (2007: #27m). (c) 3 months ended 30 September 2007 have been re-stated to include certain Mutual Funds. The Mutual Funds new business sales are also included within Mutual Funds cash inflows in the Investment Operations figures. (d) Standard Life's share of the Joint Venture Company's New Business except as noted in (g) below. (e) % change is calculated on the figures rounded to millions. (f) Calculated using constant rates of exchange. (g) Calculated based on the percentage movement in the new business of HDFC Standard Life Insurance Company Limited as a whole to avoid distortion due to changes in the Group's shareholding in the joint venture during 2007. (h) New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 9 months to 30 September 2008 were #1:C$1.98 (2007: #1:C$2.19) and #1:EUR1.29 (2007: #1:EUR1.48). Investment operations 3 months ended 30 September 2008 Opening FUM Gross Inflows Redemptions Net Inflows Market & other Net Closing FUM 1 July 2008 movements movement 30 Sep 2008 in FUM #m #m #m #m #m #m #m UK Mutual Funds (a) 5,375 352 (b) (299) 53 (640) (587) 4,788 Private Equity 2,955 232 (8) 224 (4) 220 3,175 Segregated Funds 12,289 218 (196) 22 (738) (c ) (716) 11,573 Pooled Property 616 - - - 314 (c ) 314 930 Funds Total UK 21,235 802 (503) 299 (1,068) 769 20,466 Canada Mutual Funds (a) 1,469 55 (e) (42) 13 (56) (43) 1,426 Separate Mandates 1,665 30 (134) (104) (85) (189) 1,476 (d) Total Canada 3,134 85 (176) (91) (141) (232) 2,902 International Europe 73 380 (3) 377 16 393 466 Asia (excluding 85 1 (4) (3) (21) (24) 61 India) India 2,205 (16) (f) - (16) 88 72 2,277 Total International 2,363 365 (7) 358 83 441 2,804 Total worldwide investment products excluding money 26,732 1,252 (686) 566 (1,126) (560) 26,172 market funds Money market funds (g) 5,497 - (1,173) (1,173) (52) (1,225) 4,272 Total worldwide investment products 32,229 1,252 (1,859) (607) (1,178) (1,785) 30,444 Total third party funds under management comprise the investment business noted above together with third party insurance contracts. New Business relating to third party insurance contracts is disclosed as insurance business for reporting purposes. An analysis of total third party funds under management is shown below. Opening FUM Gross Inflows Redemptions Net Inflows Market & other Net movement Closing FUM 1 July 2008 movements in FUM 30 Sep 2008 #m #m #m #m #m #m #m Third Party Investment 32,229 1,252 (1,859) (607) (1,178) (1,785) 30,444 Products Third Party Insurance 15,253 793 (396) 397 (1,348) (c ) (951) 14,302 Contracts (new business classified as insurance products) Total third party funds under 47,482 2,045 (2,255) (210) (2,526) (2,736) 44,746 management Standard Life Investments - 130,553 123,620 (h) total funds under management (a) Included within Mutual Funds are cash inflows which have also been reflected in UK and Canada Mutual Fund new business sales. (b) In the 3 months to 30 September 2007 UK Mutual Funds gross inflows were #511m and net inflows were #288m. (c) Included within market and other movements there is an internal reclassification between Property (#368m increase), Third party Insurance contracts (#463m decrease) and Segregated Funds (#95m increase). (d) Separate Mandates refers to investment funds products sold in Canada exclusively to institutional customers. These products contain no insurance risk and consist primarily of defined benefit pension plan assets for which SLI exclusively provides portfolio advisory services. (e) In the 3 months to 30 September 2007 Canadian Mutual Funds gross inflows were #57m and net inflows were #31m. (f) International gross inflows include India where, due to the nature of the Indian investment sales market, the new business is shown as the net of sales less redemptions. (g) Due to the nature of the money market funds, the flows shown are calculated using average net client balances. Other movements are derived as the difference between these average net inflows and the movement in the opening and closing FUM. (h) Closing FUM reflects the transfer out of #6.7bn of FUM in relation to UK immediate annuity liabilities to Canada Life International Re, reflecting the reinsurance agreement disclosed in the press release dated 14 February 2008. (i) Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 30 September 2008. Investment fund flows are translated at average exchange rates. Gains and losses arising from the translation of funds denominated in foreign currencies are included in the market and other movements column. The principal closing exchange rates used as at 30 September 2008 were #1: C$1.90 (30 June 2008: #1:C$2.02) and #1:EUR1.27 (30 June 2008: #1: EUR1.26). The principal average rates for the 9 months to 30 September 2008 were #1: C$1.98 (2007: #1:C$2.19) and #1:EUR1.29 (2007: #1:EUR1.48). Insurance operations new business 15 months ended 30 September 2008 Present Value of New Business Premiums (PVNBP) 3 months 3 months 3 months 3 months 3 months to 30 Sep to 30 June to 31 March to 31 Dec to 30 Sep 2008 2008 2008 2007(a) 2007 #m #m #m #m #m UK Insured SIPP & Drawdown 272 379 473 489 624 Non-insured SIPP 543 636 586 470 397 Individual SIPP 815 1,015 1,059 959 1,021 Individual Pensions 136 276 159 106 180 Group Pensions 489 907 896 731 543 Institutional Pensions 590 604 360 544 489 Pensions 2,030 2,802 2,474 2,340 2,233 Investment Bonds 161 373 652 336 449 Offshore Bonds 163 152 118 116 84 Mutual Funds 169 176 148 158 163 Savings and Investments 493 701 918 610 696 Annuities 109 132 120 113 124 Protection 2 - 4 5 6 UK life and pensions 2,634 3,635 3,516 3,068 3,059 Europe Ireland 71 63 94 103 101 Germany 140 141 121 305 157 Europe life and pensions 211 204 215 408 258 Canada Group Savings and Retirement 176 455 312 357 142 Individual Insurance, Savings 72 75 105 95 90 and Retirement Group Insurance 64 59 64 63 34 Mutual Funds 49 56 75 70 65 Canada life and pensions 361 645 556 585 331 Asia Pacific India (b) (c) 109 59 147 40 45 China (b) 24 23 19 22 14 Hong Kong 14 13 5 11 9 Asia Pacific life and pensions 147 95 171 73 68 Total worldwide life and 3,353 4,579 4,458 4,134 3,716 pensions (a) The PVNBP sales for the 3 months to December 2007 are different from those published in the full year 2007 new business press release issued on 30 January 2008 as they incorporate year end non-economic assumption changes calculated and published in the Preliminary Results 2007 on 12 March 2008. (b) Amounts shown reflect Standard Life's share of the Joint Venture Company's new business. (c) The PVNBP for all periods in 2008 for India include revisions to opening assumptions. These were not reflected in the published results for 6 months to 30 June 2008 and for 3 months to 31 March 2008. Consistent with treatment in previous reporting periods PVNBP sales for all territories will exclude year end non-economic assumption changes, which will not be reflected in the PVNBP results until publication of the Preliminary Results 2008. This information is provided by RNS The company news service from the London Stock Exchange END IMSBKLLLVBBLFBB

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