Standard Life CEO outlines appetite for further M&A after 2022 momentum boost

Standard Life – the historic Scottish financial services name dating back more than 200 years – is mulling further acquisitions after an “excellent” 2022 including further momentum in its workplace pensions business.

The organisation has revealed its results for last year alongside those of FTSE100 parent company Phoenix Group. The latter acquired Standard Life Assurance and Standard Life Europe from Standard Life Aberdeen (now Abrdn) in 2018, buying the Standard Life brand itself from it three years later.

Phoenix Group has now revealed £1.5 billion of cash generation in 2022, exceeding its £1.3bn-to-£1.4bn target range for the year, although down from the £1.7bn achieved in the previous year, and said a 5 per cent increase in the final 2022 dividend to 26 pence per share is recommended by the board.

It also hailed the £1.2bn of incremental new business long-term cash generation, up slightly from 2021, while it also revealed £4.8bn of bulk purchase annuity premiums, which it said generated a broadly stable level of incremental new business long-term cash generation, but were down from £5.6bn in the prior year. However, workplace net fund flows increased more than ten times to £2.4bn, with a 53 per cent increase in incremental new business long-term cash generation to £212 million.

Edinburgh-based Standard Life – which can trace its roots back to 1825 – has hailed £1.2bn of incremental new business long-term cash generation in 2022. Picture: Jeff J Mitchell/Getty Images.

The group, which in August stated that it performed “very strongly” over the first half despite a challenging economic backdrop, said it delivered “sustainable” organic growth through its Standard Life branded pensions and savings businesses, for example, and flagged 76 new workplace schemes with an aggregate asset value of about £2bn that will transfer over the next one to two years.

Andy Curran, chief executive of Edinburgh-based Standard Life, told The Scotsman that 2022 “was an excellent year for us across all of our main financial measures” and said that looking to the rest of 2023 and beyond, “we remain extremely positive about the opportunities for us as a growth business operating under the Standard Life brand”.

He also flagged Phoenix Group last year inking its first-ever cash funded acquisition of Sun Life of Canada UK for £248m, a deal it expects to generate about £470m of incremental long-term cash generation.

Deal activity

Mr Curran said it will continue to look at smaller cash-funded merger and acquisition (M&A) deals, in addition to planned organic growth. “We are now winning some of the largest workplace schemes coming to market… [Our] ability to support both modern auto-enrolment schemes and de-risking of older style defined benefit pension as well as the wider retail savings market means we are aligned to a number of huge growth markets,” he also said.

The CEO also said that despite cost-of-living challenges, “very few [consumers] are cutting back on their pensions and people continue to put money aside for the future”, adding: “In short, consumer behaviour hasn't changed as of yet, but obviously we'll keep a very close eye on that.”

Standard Life will in 2025 celebrate its 200th anniversary, in what Mr Curran believes will be a “very big year for the organisation”. He added that under its ownership by Phoenix: “We have reinvigorated the brand, we relaunched the brand… This year, we'll continue to invest in [it]. And we see that as being a key cornerstone in our growth ambition across the group.”