Life insurance and savings group Standard Life (SDLF) delivered better-than-expected FY25 profit and maintained its FY26 guidance. The firm, formerly known as Phoenix Group, changed its name and stock ticker earlier this year.
A growing market
The company buys and manages books of pensions and life insurance businesses which are closed to new customers. Over the past few years, more firms have moved to sell their Workplace pension liabilities to insurers.
The UK long-term savings and retirement market is expected to grow by 70% over the next decade. Additionally, the company sees annual flows in the Workplace market reaching around £80 billion.
For the year to December, the group posted an operating profit of £945 million against the consensus of £937 million. Year-end cash also topped estimates at £1.71 billion against the consensus of £1.66 billion.
Workplace pensions saw gross inflows of £10 billion, while total Workplace customers reached 3 million. The number of new Workplace customers increased 14% last year to just under 250,000.
Retirement solutions also saw positive demand with average assets increasing to £40 billion and rising margins. The firm wrote £1.2 billion of individual annuity premiums last year, giving it a 15% market share.
Focus on cash
The firm’s profitable growth has resulted in significant and rising levels of excess cash, which it is using to pay down debt. The group paid off around £385 million of borrowings last year, reducing its leverage ratio to 33% from 36% previously.
In addition, cost savings increased from £63 million to £180 million last year, £55 million ahead of target. Therefore, distributable reserves available for shareholder returns increased from £5.57 billion to £5.8 billion.
For FY26, the company expects to generate a further £500 million of surplus cash to add to its pile. Leverage is seen decreasing to 30%, with FY26 being the final year of using excess cash to pay down debt.
Looking after pensions and savings isn’t a glamourous job but it’s highly lucrative and generates lots of cash. The latest results from the renamed Standard Life show the group is in good fettle, winning business while improving margins.
Since 2024, surplus cash has been used to pay down debt and it’s the same story this year. However, after that the firm says its aim is ‘for shareholders’ equity to grow’, and it will reveal its plans in Q4.
Lastly, the name change was a smart move as Standard Life is well-known and trusted brand. While we can’t measure the impact in financial terms, we suspect it can only help especially in the retail market.
Disclaimer: The author (Ian Conway) owns shares in Standard Life
Read the press release here: https://www.standardlifeplc.com/investors
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