You’d think that in insurance terms, yesterday a British club beat off Europe. I’m not talking Arsenal but Standard Life. A few decades  back I worked for Eagle Star and Allied Dunbar and they got eaten by Zurich who set up a new light company capable of competing for savings. That was a failure with the workplace pensions business being sold to Scottish Widows and the rest becoming legacy. The same can be said for several other insurers including Axa and now Aegon.

The European model does not work for life insurance in Britain. The big Life insurers left playing are quoted in Britain. Legal & General, Royal London and Standard Life are supplemented by insurers such as Rothesay and Prudential (now M&G) who we can call British and Just, PIC , LV= and Utmost who are in the annuity market and heavily in, usually owned by American private equity companies.

I do not pretend to understand the insurance industry in the way that Gordon Aitken does. He was the man who told us that Standard Life would eat up Aegon and he writes a great analysis of how Standard Life is doing what my Zurich couldn’t do and make money out of being a lite- insurance company.

Here is the analysis of how Standard intends to make money out of managing our money to compete with the investment houses, Hargreaves Lansdown and SJP stand out as super lite savings organisations.

But the trouble for insurers is that the biggest players in the retirement savings market are Nest, People’s and WTW all of which are very lite on insurance to the point that they by-pass if. L&G is of their size and can argue that it is primarily an asset manager. Despite wanting to compete with those in the asset management market Standard Life does not have its own asset management or fund management reputation.

I get this shudder that I got when Allied Dunbar stopped being an advice driven insurers (SJP took the management and the advisers) and Eagle Star stopped being a provider of insurance guarantees. What was left. Zurich had a general insurance business to fall back on. But has Standard anything to fall back on? I suspect that its hope is to compete with L&G and the American firms in buying into and buying out of the £1.2 trillion DB pension market.

It may find a place as an insurer by offering an endgame for DC – now known as “flex and fix” allowing individual savers to feel they have a pot until they get too old to need that privilege when they are annuitized (put to bed in preparation for a wooden box).

But for the most part, I see the statements coming from Andy Biggs as a little lite in ambition, just as Zurich’s were and Gordon Aitken explains

On the announced multiples, Aegon UK is valued at 0.83x Unrestricted Tier 1 own funds (the highest-quality capital on the Solvency II balance sheet, £2.4bn at FY25), 14.2x 2025 operating profit after tax, and 1.9x IFRS shareholders’ equity. On paper the 0.83x looks cheap. There is a straightforward explanation for why it isn’t.

Gordon Aitken looks at the 0.83% through “the synergy premium” and the “embedded value” methodology and concludes that Aegon isn’t worth it on either. He goes on to point out that Aegon is now rid of all the heavy stuff.

The other reason Standard Life is willing to pay 0.83x is the nature of the asset. Aegon UK is fully fee-based. The £9bn UK annuity book went in 2016, £6bn to Rothesay in April and £3bn to L&G in May, at a loss of €628m. Since then Aegon UK has been a workplace pensions, adviser platform and retail savings business with no annuity capital drag. Capital-light fee income is exactly the business mix an acquirer wants in the UK market today.

I cannot pretend to understand Gordon Aitken’s more sophisticated valuation descriptions but I can speak as someone with my money in ISA and workplace pensions , positioned to move into a pension when I can find one. I suspect that there are many people nearing the end of their working lives who want a retirement income that keeps pace with inflation and gives value for money against some internal view of likely returns. I would like more than an annuity, even if it is a “put to bed” flex and fix deferred annuity.

Just as I don’t want to be considered in an “end game” , so I suspect that many pensions are waking up to the idea of there being collective value to be had by remaining invested either on their own or collectively. CDC and superfunds are both challenges to the personal pension model that insurer’s “lite” model is based on. Even if they operate under a master trust, the insurer lite model is to Aitken retail

The challenge is that defined contribution (DC) workplace pensions and retail platforms are a margin-compression story. Auto-enrolment charges are heading towards 30 to 40 basis points, well inside the 75bps auto-enrolment default fund statutory cap (introduced in 2015 and unchanged since). The retail platform fee war, Hargreaves Lansdown against AJ Bell against the insurer platforms, shows no sign of abating.

Fixed cost per pound of assets is what matters. Aegon UK never reached the critical mass to win that fight alone. Stack it onto Standard Life and the combined group becomes the number two in UK Workplace and number two in UK Retail, with £480bn of assets under administration, 16m customers, and pro-forma gross annual flows of £18bn in Workplace and £12bn in Retail. Workplace AUA moves from £71bn to £145bn; the retail business moves up to number two

This new enlarged entity is competing alongside L&G for our savings. Like L&G it will buy-out our pensions and like L&G it is after scale. But L&G (and Zurich) have a general business too. I am not convinced that an insurer is capable of competing in a fierce market without insuring anything. Standard is a broker to reinsurers but shows no appetite for social insurance. I don’t think Standard Life is interested in pensions.