Standard Life after Scottish vote

Standard Life will issue a trading statement on Wednesday 29 October which covers its third quarter.

Standard Life logo
Source: Bloomberg

Scotland’s largest insurer stated it would move south of the border if Scotland voted for independence. Scotland has since rejected independence but traders are wondering, did Standard Life incurred any outflows of funds on the run up to the vote?

In August, the company reported an 11.5% increase in operating profits to £339 million, while assets under management rose by 4% to $108 billion. These figures were taken from the period ending 30 June. New pension laws introduced by George Osborne which scrapped compulsory annuities impacted the business, and profits earned from annuities declined by 59%. CEO David Nish stated the company is now well positioned to deal with the changes, as the company has moved away from life insurance and more towards money management.

In September, Standard Life sold its Canadian unit for the equivalent of £2.2 billion in cash. The Edinburgh-based company pledged to return £1.75 billion to shareholders in the form of a dividend that equates to 73p per share. Traders should also keep in mind that the interim dividend was increased by 7.3% to 5.6p. 

The firm is also focusing on expanding its presence in China. The Scottish firm has agreed a deal with Industrial and Commercial Bank of China to offer investment and savings services; the memorandum of understanding will bring benefit to companies in the UK, China and Hong Kong. The Chinese bank already works with Heng An Standard Life, in which the Edinburgh headquarters owns a 50% stake.

The company will announce its full-year figures in February 2015. Traders are expecting annual revenue of £22.97 billion and net income of £516 million. This compares with 2013’s full-year revenue of £20.54 billion and a net income of £602 million. 

Equity analysts are bullish on the stock. Out of the 22 ratings, nine are buys, nine are hold and four are sells. The average target price is £4.19.

The share price hit an all-time high in September when the insurer announced the special dividend, and now that the gap has been filled the share could target £4.25 if the full-year outlook is positive. To the downside, support has been provided by the £3.65 region in the past few months.

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