Standard Life 2006 beats forecasts, eyes job cuts

London, Mar 22: Insurer Standard Life beat market forecasts on Thursday with a 55 percent rise in 2006 profit and said it planned a shake-up of its core UK business including 1,000 job cuts to squeeze out more costs by 2009.

In its first full-year results since it listed last summer, the British insurer said it expected to reduce underlying costs by 100 million pounds (5.7 million) per year by 2009 by driving savings within its divisions as well as cutting its underlying headcount.

Standard Life said involuntary job losses would be kept to a minimum, with growth and turnover accounting for most of the change.

''These initiatives are in addition to the targets announced at the time of the IPO and will enhance our ability to grow profitably in the medium term,'' Chief Executive Sandy Crombie said in a statement.

''We are on track to achieve our return on embedded value target for 2007 of 9-10 percent and increasing thereafter,'' he added. ROEV was 8.9 percent in 2006 against 7.4 percent in 2005.

Standard Life said its 2006 operating profit, on a European embedded value basis, was 614 million pounds, up 55 percent.

According to the average of a poll of forecasts by Reuters Estimates, analysts had expected 497 million pounds, with estimates ranging from 449 million to 574 million pounds.

In the UK, operating profit climbed 37 percent as positive assumption changes offset 207 million pounds of provisions to take account of customers cashing in policies early.

The former mutual, which took a 100 million pound increase to provisions at the half-year, said last month it was still seeing policy lapses above its long-term assumptions.

The group's new business contribution before tax came in at 205 million pounds, compared with just 33 million pounds the year before, though margins were a touch below expectations at 1.4 percent.

The insurer said it would pay a dividend of 5.4 pence per share for the period since its July IPO, adding that represented around half of the total dividend that it would have expected to pay if it had been listed for all of 2006.

Its embedded value per share -- which gives an indication of the value of an insurance portfolio -- was 258 pence, against an average forecast of 257.2 pence.

Standard Life trades at a discount to the UK life sector, largely due to its lower return on embedded value, but its shares have climbed more than 25 percent since its listing last July, outperforming the sector by more than 10 percent, according to Reuters data.

The shares closed at 307 pence on Wednesday, valuing the group at almost 6.5 billion pounds.

Reuters