Standard Life confirms demutualisation and flotation plans

MONTREAL, Oct. 17, 2005 – The Board of Standard Life today confirms that it intends to recommend to members that the Company should demutualise and list on the London Stock Exchange, subject to satisfactory completion of all legal, regulatory and other processes. Standard Life will be writing to its eligible members before the end of October 2005 asking them to confirm their policy and contact details to ensure they receive their demutualisation entitlement. Most eligible members would receive free shares in place of their membership.


  • Most eligible members would receive free shares in place of their membership. For legal and practical reasons, some eligible members will not receive shares; these members would receive cash or policy enhancements instead.

  • Standard Life will seek members’ approval at a Special General Meeting (SGM) expected to take place in May or June 2006. Members eligible to vote will be asked to vote on the proposals at the SGM. For demutualisation and flotation to go ahead at least 75% of those who vote will need to vote in favour of the proposals.

  • The Board of Standard Life also announces that membership of the Company will close with effect from and including 18 October 2005. Applications for new business received on or after 18 October will not give rise to membership rights.

  • A new holding company, Standard Life plc, would own the Standard Life group on flotation and would be listed on the London Stock Exchange. The actual date of flotation will be as soon as practicable after the SGM and will depend on a number of factors, including legal and regulatory processes and stock market conditions.

  • Members whose with profits policies mature on or after 18 October may be able to qualify for free shares. This would require members’ approval at the SGM and the Board intends to propose an amendment to Standard Life’s Regulations to enable this to happen. Any member whose policy matures before 18 October will not be entitled to any free shares on the basis of that policy.

  • The proposals put to members will be assessed by the Financial Services Authority (FSA) and will be subject to the approval of the Court of Session in Scotland. The independent expert, Mr Mike Arnold, will report to the Court of Session on the proposals. Various legal, regulatory and other requirements will also have to be met for demutualisation and flotation to take place.

Commenting on the Board’s announcement, Chairman Sir Brian Stewart said:

“The Board continues to believe that demutualisation and flotation is the best way forward and in the best interests of members, customers and the company. We expect to put proposals to members ahead of a Special General Meeting next May or June.

“If the proposals are supported by members, most eligible members will have the opportunity to receive free shares in place of their membership. However, it is too early to speculate on the value of these shares.

“During October we will write to eligible members. It is very important they respond to make sure that we have accurate information about their policy and contact details. By doing this we can ensure they receive their shares, or other demutualisation entitlement.

“Under the leadership of Sandy Crombie, we have made excellent progress since the strategic review of the business began in January 2004. There remains a lot of work to be done before our proposals can be put before members, but I believe Standard Life has an exciting and successful future. The proposed demutualisation and flotation are key stepping stones in realising our ambitions.”

This announcement is not for distribution in the United States, Japan, Australia or any other jurisdiction where such distribution would be illegal. The information contained in this announcement does not constitute an offer for sale of securities in the United States, Japan, Australia or any other jurisdiction. The securities referred to herein may not be offered or sold, directly or indirectly, into the United States unless they are registered under the U.S. Securities Act of 1933, as amended, or exempt from registration. Standard Life does not intend to register the securities referred to herein in the United States. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted.

About Standard Life

Company information

Standard Life ( is one of the largest financial services groups in the UK with funds under management of pnds stlg 117 billion ($256.86 billion) as at 30 June 2005 and worldwide gross premium income of pnds stlg 6.2 billion ($14.32 billion) for the six months to 30 June 2005. Standard Life has approximately 7 million customers worldwide, of which some 2.4 million are eligible members.

Standard Life consists of Life & Pensions UK and Europe (comprising operations in Germany and Austria, and Ireland), Standard Life Bank, Standard Life Investments and Standard Life Healthcare, as well as having operations in jurisdictions such as Canada, India, China and Hong Kong through branches, subsidiaries and joint ventures.

Rationale for demutualisation

Standard Life believes that there are increasing risks to with profits policyholders if Standard Life were to remain as a mutual and that demutualisation reduces these risks. The three main reasons why Standard Life now believes it is right to demutualise and give eligible members their share in the value of Standard Life’s business in place of their membership are:

  • Unlocking value for members

    Demutualisation and flotation would give eligible members access to their share in the value of Standard Life’s business in place of their membership rights. In the past, Standard Life was able to offer members extra benefits from being with a mutual company. The Company no longer has the same flexibility to provide these additional benefits. Eligible members have a choice between Standard Life continuing as a mutual or voting for demutualisation and unlocking their share of the value of the Company whilst keeping their policies.

  • The risks of membership are increasing

    In a mutual business, with profits investors bear the business risks and rewards of the group. While in some markets (e.g. Germany) with profits remains a popular choice, across the business as a whole with profits investors are expected to decline as a proportion of the total customer base. As a result, the overall risks of the business to which with profits investors are exposed are expected to be borne by progressively fewer people. In a plc these risks generally lie with shareholders so demutualisation should reduce these risks for policyholders.

  • Access to external equity capital

    At the time of the proposed listing on the London Stock Exchange, Standard Life intends to raise capital to support and develop its business. Demutualisation and flotation would give Standard Life access to external equity capital which would not be available to it as a mutual.

Confirmation of details mailing

The mailing to confirm policy and contact details will begin on 18 October 2005.


  • Members: Generally, they are policyholders of The Standard Life Assurance Company (or, if there is more than one holder of a particular policy, the first named or nominated of the policyholders) who have complied with the conditions of their policy. They have rights, which include being entitled to receive and inspect minutes of Annual General Meetings (AGMs) and Special General Meetings (SGMs).
  • Qualifying members: Generally, they are members of The Standard Life Assurance Company who have been continually investing in with profits for six months or more. They are entitled to vote and speak at AGMs and SGMs.
  • Eligible members: They are members of The Standard Life Assurance Company who would be eligible to vote and/or get shares or other demutualisation entitlement if Standard Life demutualises and floats on the stock market. They are predominantly members in respect of a policy which has been continually invested in with profits since 30 March 2004*; where the holders have complied with the terms of their policy; and whose policies are still in force on the day of an SGM.
  • *New members who have made a with profits investment on or after 31 March 2004 are mostly subject to declarations waiving their right to vote on demutualisation proposals and receive compensation for loss of membership rights.

Member share allocation and position of overseas residents

If Standard Life demutualises most eligible members will get an allocation of shares (‘free shares’) in place of their membership, which they will no longer have as a result of the demutualisation. These shares are free in the sense that eligible members will not have to pay any money for them. If Standard Life does become a public company by demutualising and floating on the London Stock Exchange, then eligible members will keep their policies which will continue to be insured by a company within the Standard Life group, as well as receiving these shares. Standard Life will make sure that policyholders’ interests and security are protected and has a legal obligation to do this.

Other eligible members, including those who are residents of the United States, Australia, New Zealand or certain other overseas jurisdictions, would receive cash or policy enhancements for various legal or practical reasons.

Investment bank advisers

Standard Life is being advised by Lazard, Merrill Lynch and UBS Investment Bank.

Mike Arnold – independent expert

An independent expert will review the likely effects of the demutualisation proposal and prepare a report which is submitted to the Court of Session. Amongst other things, the review will consider the interests of policyholders and members. In April Standard Life appointed Mike Arnold to carry out this review. He is a qualified actuary and has been the independent expert for a number of well-known UK insurance companies who have demutualised. The Financial Services Authority has approved his appointment.