Standard Life members back stock market plan

Standard Life members agreed today to end 80 years as a mutually-owned company in an historic vote.

More than 1.5 million members voted 98% in favour of plans for a stock market flotation at a special general meeting of the insurance and investment business.

If carried out, it would see about 2.4 million members receive an average windfall of around £1,700 (€2,500).

There are 94,000 members of Standard Life in Ireland and they stand to receive pay outs of between €725 and €1,450 from the floatation.

At the meeting in Edinburgh, a total of 1,577,788 votes were received, with 1,545,314 for demutualisation and 32,474 against.

Applause from about 400 policy holders present at the meeting greeted the vote outcome.

They had been asked to decide on one resolution – “to demutualise and float on the London Stock Exchange”.

The company’s chairman Brian Stewart immediately hailed the vote as great news for the business.

He said: “I can’t describe just how successful it’s been, I would like to thank everyone who has been involved.”

Opening the meeting earlier, Stewart had urged members in the audience still to make their decision to vote in favour.

He said demutualisation would unlock the value of the business for policy holders and allow it to raise more capital on the financial market.

“Today is a historic day for Standard Life, it’s the beginning of another phase in Standard Life’s history and I can see that many of you feel that.

“We believe it will provide significantly more opportunity for the development of Standard Life and is in the best interests of members, customers and policy holders.”

To a round of applause, he added: “We will be as committed as a Plc as a mutually owned company. I would urge you to vote for this resolution.”

Management needed the support of at least 75% of voters and had been hoping for a turn out of at least one million to prove demutualisation had sufficient support.

The decision had been widely predicted due to the number of people in line for a windfall.

About half the membership will earn £500-£1,000 (€729-€1,500) from the flotation, with the remainder collecting in excess of that.

The windfalls will be largest for people who took out a with-profits policy a long time ago and have invested significant sums in it since then.

Postal voting closed at midnight on Sunday, with the final votes cast by members at today’s meeting minutes before the outcome was flashed up on a screen.

Court approval will be needed during a June hearing before stock market listing can go ahead.

More details on the subsequent flotation, which could happen in July, are expected to follow. It is likely to value Standard Life at between £4.8bn (€7bn) and £5.5bn (€8bn).

The company has just over £124bn (€181bn) of funds under management and has reorganised its business to prepare for the listing.

Figures released yesterday showed first quarter profits from new business at a better-than-expected £30m (€44m) compared with £33m (€48m) for the whole of last year.

Businessman Yuill Young, 65, from Ayr, said he believed today's move would boost the company in the years to come.

He said: “There’s no question it will take the company forward. I think the company can go forward with confidence. I think the board feel that they have carried the day. This is what they wanted.”

Policyholder Angela Kjolseth, 47, said today’s decision was right in such a competitive market.

Ms Kjolseth, who works for Standard Life as an information security manager in Edinburgh, said: “I think the markets have forced the company into this position.

“It’s absolutely the right thing to do because the company needs to diversify. This is one of the ways it will be able to obtain the capital to enlarge to do that and to keep up with the competition.

“The whole financial markets have changed, we can’t just be a life assurance company any more.”

Ms Kjolseth said she was surprised by the scale of support for de-mutualisation shown by members.

She added: “It’s excellent recognition of the good work myself and others who work for the company have done over the last few years.

“Staff have put in a lot of extra effort to improve the profits and sell the business and that’s obviously paid off.”

Peter Ware, from Woking, Surrey, said he had opposed the move from the start and was unlikely to continue investing with Standard Life.

The 38-year-old catering office manager said: “I actually think it’s a sad day.

“Everybody just seems to be interested in how much money they are going to make. I didn’t invest in Standard Life initially as a policyholder because of the financial gain potentially I would get from effectively becoming a carpetbagger.

“I was against it in 2000 and I’m against it today.”

He added that members had lost a part of history by being too easily swayed by the prospect of a windfall.

He said: “They’ve lost part of history. Before, anybody could be a member, but it was one member, one vote.

“The company became a mutual company in 1925, so it was almost 100 years old from a mutual point of view. I just think it’s very, very sad.”