Windfall surprise at Standard

£2,000 average payout for policyholders as Scottish life and pensions giant aims for a £6bn market valuation
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The Independent Online

The average windfall for Standard Life's 2.4 million potential shareholders is likely to be as high as £2,000, twice what had been expected.

Potential gains from the £6bn flotation of the Scottish life and pensions giant will be detailed on Tuesday, when the group publishes its financial details and calls on members to back its demutualisation plans. City analysts had been expecting an average windfall of between £500 and £1,000. The Independent on Sunday has learnt that it is more likely to be in the region of £1,500 to £2,000.

However, because of the wide spread of different types of policyholders, only a few thousand will receive windfalls of more than £2,000 and most will get £1,000 or less.

Standard Life was, until 2004, committed to mutuality. But after a run-in with the City regulator, the Financial Services Authority, it underwent a Damascene conversion, promoting Sandy Crombie to chief executive to lead it to market.

The financial figures being released this week will show a radical overhaul of the way the 181-year-old group does business and how it accounts for it. It will restate already published figures for 2004 - to record a £100m loss - and will produce for the first time figures for 2005, which are expected to show a modest return to profitability.

However, on the back of a strong performance in the Sipps market and an emphasis on higher-margin business, Mr Crombie will be able to point to a good start to 2006.

Standard Life is to raise about £1.2bn of extra capital in a float which is expected to value the group at around £6bn. This will leave nearly £5bn to be shared among the 2.4 million qualifying policyholders, making for an average windfall of around £2,000. However, because of the way it will be divided, few will see this much.

All policyholders will get a basic allocation of around 250 shares, worth about £500. Another allocation will be worked out based on how long the policy has been held and how much is invested.

The spread of payouts will range from nearly nothing to tens of thousands of pounds. It is expected that most policyholders will receive around £1,000.

Sir Brian Stewart, Standard Life's chairman, will give no details of his future on Tuesday. It had been expected he would step down because he is also chairman of Scottish & Newcastle, the brewer. Any decision will be left until after Standard Life floats.