# Possibility of Standard Life Demutualising



## Kilteragh (13 Jan 2004)

I thought this would be today's hot topic! Perhaps it has been discussed somewhere else - taken from yesterday's Sunday Times

Standard Life prepares for float
William Lewis and Louise Armitstead

THE board of Standard Life, Europe’s biggest mutually owned life company, is drawing up secret plans to restructure the business in a bid to shore up its financial position. 
Advisers at UBS have been hired to prepare Standard Life for a £5 billion stock-market flotation, as a possible option for restructuring. 

The board of Standard Life is thought to favour flotation, but it is also exploring raising capital in the bond market. Standard Life could also demerge its American subsidiaries or its investment division, which has £86.5 billion of funds under management. 

The investment-banking advice has been sought as talks continue between Standard Life and the Financial Services Authority (FSA) on the company’s capital adequacy under the regulator’s new accounting practices for life insurers. 

During the talks, which started at the beginning of December, it has emerged that Standard Life’s capital strength will look considerably weaker under the regulator’s new “realistic” accounting rules. As a result, the company is likely to have to raise capital to comply. 

In recent months Standard Life has insisted that it will remain a mutual, but the board now recognises that it needs to consider demutualisation in order to raise funds. In addition, the new regulatory approach from the FSA makes a stock-market listing more attractive. 

“The mutual structure does not fit the FSA’s new regime,” said one person with knowledge of the board’s thinking. 

As Standard Life seeks to find ways to preserve capital, it is also expected to cut bonus payments to policyholders by at least 10% this year. 

The plan to demutualise marks a radical change in position at Standard Life, which in the past three years has firmly quashed two demutualisation campaigns launched by disaffected policyholders. 

Although all life insurers were hit by plummeting stock markets, Standard Life was the worst affected as it had the highest equity exposure for longest. 

Ned Cazalet, analyst at Cazalet Consulting, said: “The present management has presided over the company during a time when its capital base has been eroded by billions of pounds in three years. 

“Its with-profits fund is in tatters and its reputation damaged. There need to be big changes at the top before Standard Life can successfully raise any money.”


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## IPO (13 Jan 2004)

*standard*

Although it is probably a bit late in the day to get in as a carpet bagger, what is the cheapest way this could be done?

Does anyone know if they have any simple deposit type accounts that qualify?


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## Delboy (14 Jan 2004)

*Std Life*

IPO,

to the best of any knowledge, when you purchase any of their membership qualifying policies, you must sign a 3 year waiver to any demutualisation payouts.

I had to do this when I got a with-profits policy with them about 2.5 years ago.


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## garrettod (15 Jan 2004)

*Standard Life to demutualise ?*

Hi,

Yes - that's right, there has been a 3-year signaway in place for quite a while now.

Infact, I'd not be suprissed to hear they have now extended this to make it a life time signaway (of potential windfall benifits), given recent events and the talk of demutualisation.

In answer to the earlier question, Yes - there is further discussion on this "hot" topic, simply click on the following links:




& 




Regards

G>


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## N0elC (15 Jan 2004)

*Re: Standard Life to demutualise ?*

Was listening to the [broken link removed] on the BBC yesterday morning, where they mentioned that SL have now instituted a lifetime signaway.

This often happens when mutuals come under pressure. This is why I'm very keen for people to open accounts with the EBS, before the pressure builds on them to DM, as it is likely to do, once the windfalls start to flow from INBS and SL.


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## rainyday (15 Jan 2004)

*Re: Standard Life to demutualise ?*



> This is why I'm very keen for people to open accounts with the EBS


It is most generous of you to want to reduce your own possible windfall by sharing it out with more people.


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## N0elC (15 Jan 2004)

*Re: Standard Life to demutualise ?*

Why do you object to members receiving a windfall ?

The value in the EBS and other mutuals, such as INBS and SL, should be freed up and passed on to the members for them to do with as they see fit.

The more DM supporters who become members, the more likely two events are:
1) that EBS directors will block small savers from becoming full members
2) that the EBS will eventually demutualise.

If anyone wants membership they should sign up ASAP. As evidenced by the SL scramble to the stockmarket, despite their previous quasi-religious adherenece to mutuality, that Demutualisation may occur a lot sooner than later.

Particularly if the Rabobank merger / takeover occurs, there will have to be some element of demutualization for the society


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (15 Jan 2004)

*Re: Standard Life to demutualise ?*



> Why do you object to members receiving a windfall ?



Rainyday said no such thing.



> despite their previous quasi-religious adherenece to mutuality



Who are you talking about here?


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## N0elC (15 Jan 2004)

*Re: Standard Life to demutualise ?*

The cynical tone of his message seems to suggest that he is. Either that, or he's being very flattering about my well reknowned magnanimous spirit !

:rollin 

For those of us who have followed the fortunes of SL, we are only too aware of the managements heretofore blinkered views on mutuality. The net result of this almost religious devotion to the cause of mutuality has been that the average value of a windfall has fallen from almost £6k in the last DM push in 2000 to about £2k now.

So much for mutuals protecting value !

:rolleyes 

It’s a real pity that ClubMan isn’t around any more. He used to have such interesting thoughts on demutualization.


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## rainyday (15 Jan 2004)

*Re: Standard Life to demutualise ?*

I was merely pointing out that your frequent encouragement to get fresh carpetbaggers into EBS will by definition reduce the size of any possible windfall for existing EBS members like you & me.


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (15 Jan 2004)

*Re: Standard Life to demutualise ?*

Still don't know what "quasi-religious zeal" above was all about or who it referred to ....


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## N0elC (15 Jan 2004)

*Re: Standard Life to demutualise ?*

A valid point. But, to be honest, if we’re ever likely to get that windfall, then we need to get more pro-DM members on board. As I understand from a friend who works in the EBS, they are getting a flood of applications for new savings accounts at the moment. So it augurs well !!!

The more members there are, obviously the smaller the windfall, but we need a critical mass in order to get a DM motion through.


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## rainyday (15 Jan 2004)

*Re: Standard Life to demutualise ?*

I disagree. I would bet that your real battle would be to get a DM motion put to an AGM, not getting that motion approved by the members.


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (15 Jan 2004)

*Re: Standard Life to demutualise ?*



> A valid point. But, to be honest, if we’re ever likely to get that windfall, then we need to get more pro-DM members on board. As I understand from a friend who works in the EBS, they are getting a flood of applications for new savings accounts at the moment. So it augurs well !!!



How do you know that these savers are all or mostly pro DM?


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## Brendan Burgess (15 Jan 2004)

*Re: Standard Life to demutualise ?*

Hi Noel

Last year, we attempted to put down a demutualisation motion at the Irish Nationwide AGM. The board rejected it as illegal and they were backed up by the Central Bank.

This year, we have tried again and the board has rejected it again. We have appealed to IFSRA who might or might not support the motion.

From my reading of the Building Societies Act,only the board can propose it. The members cannot. If you want to demutualise the EBS, you will need to get your people elected to the board. 

By the way, I think that there is little point in demutualising the EBS. The reserves are very small and they would have to be distributed among a huge number of members, so the windfall would probably be only around €300 each. I haven't done a calculation - it's just a guess. The Irish Nationwide will be worth around €7000 each - that's a calculation. 

Brendan


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