Standard Life wins huge backing for £5.5bn float

The Scottish insurer Standard Life reserved itself a place in the FTSE 100 yesterday, as almost 98 per cent of its voting members backed the company's plans to demutualise, setting it on course for a £5.5bn flotation on the London market this summer.

More than 1.5 million people - around two-thirds of the group's 2.4 million policyholders - voted, one of the largest ever turnouts for a demutualisation poll. Just 32,474 voted against the proposals, a little over 2 per cent of the votes cast and less than 1.5 per cent of the company's policyholders.

Sandy Crombie, the insurer's chief executive, said the turnout and high level of support had exceeded the company's best hopes, and provided a strong mandate to take the business to market. Only Aviva, which received 99 per cent support for its demutualisation in 1997, has won a greater backing from its members. "It's an absolutely brilliant result," Mr Crombie said. "A big turnout, more than 98 per cent in favour: that's a ringing endorsement for the board's proposals and a truly emphatic mandate for change."

Although the company plans to float next month, once it has secured court approval for its demutualisation, Mr Crombie admitted the current volatility in the UK stock market could have the potential to derail its listing. He said whether the float goes ahead as planned would depend on how City institutions felt about the market conditions.

Only 400 policyholders turned out for the special general meeting in Edinburgh. Many had travelled hundreds of miles to have the chance to make their opposition to the float clear.

Although the chairman, Sir Brian Stewart, came under fire for everything from the company's poor with-profits performance through to executive pay, very few went on to vote against demutualisation.

One member called on the board to force former chief executives Scott Bell and Iain Lumsden to forfeit three-quarters of their pensions to compensate for the poor stewardship of the with-profits fund in the 1990s. Another complained many long-suffering policyholders were going to miss out unfairly on a windfall payment because they had cashed in their policies in the months before the group announced its intention to demutualise in 2004.

Sir Brian was also criticised for being one of three board members who had fought vociferously to retain the company's mutual status in 2000, when the carpetbagger Fred Woollard mounted a high-profile campaign to try to force it to demutualise.

Emotions ran much higher six years ago, with the carpetbaggers securing almost 50 per cent of the vote - but not quite enough to force demutualisation.

Mr Woollard, who lives in Australia, sent a representative to question the board yesterday, but not to point out the much higher windfall payments customers would have received if the group had floated in 2000. Instead, he called on the board to reassure investors that Standard Life's investment banking advisers, Merrill Lynch and UBS, would not deliberately underprice the issue of shares so as to offer them to their clients at a discount - "delivering them an instant profit".

Sir Brian was tight-lipped about his plans with Standard Life, saying he intended to stay until it was "properly established as a PLC". It is thought unlikely he will stay much beyond next spring. Once the company is floated, he will be chairman of two FTSE 100 companies - Standard and Scottish & Newcastle - contravening the Higgs guidelines on corporate governance.

He confirmed the group had received "a number of approaches" in the run-up to demutualisation, including one from the closed life fund consolidator Resolution.

Standard Life members will receive an average windfall payment of £1,700 when it floats.