Policyholders set for windfalls in Standard Life float

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More than one million Standard Life members are in line for windfalls of more than £1,000 as part of flotation plans revealed by the insurer today.

Around 2.4 million policyholders are eligible for shares from the demutualisation, which will earn between £500 and £1,000 for half of Standard's membership with the average windfall estimated at around £1,700.

Standard requires the support of 75% of participants in a forthcoming ballot for the changes to go ahead, with the flotation set to raise £1.1 billion from new investors and value the group at between £4.8 billion and £5.5 billion.

But the Edinburgh-based group also revealed it has been a merger target after rejecting approaches in recent weeks relating to potential deals, including one for an all-share merger.

Standard said it was not in any talks at the moment, after dismissing the earlier interest for undervaluing its business.

An 80-page pack was sent to policyholders today, recommending that members support the demutualisation.

The eligible with-profits holders will receive 185 free shares in Standard for their loss of membership, as well as more shares depending on how long they have held their policy and how much they have invested in it.

That means half of Standard's membership will receive in excess of £1,000 with the remainder set for at least £490, based on the mid-point of the forecast pricing range for the shares of between 240p and 290p.

The document alsovealed the scale of Standard's financial problems in 2004, as the insurer today reported losses of £340 million. It began looking at the possibility of demutualising in early 2004, following the introduction of a new "realistic" accounting regime by the Financial Services Authority.

But Standard made profits of £152 million last year, helped by 3,200 job cuts and a drive to write more profitable business. The financial details were released for the first time as part of preparations for the flotation.