Standard Life – an insurer adrift.

Standard Life has “bought into” ReAsurre’s Midco Pension Scheme. I have written about this and you can read it here.

I have published  the excellent comment received on my email yesterday. It came on a day when I was thinking of the hopes I had when Mike Ambery joined Standard Life, a short time after joining he has left. It seems  that Standard Life has lost direction. Standard Life was a Scottish mutual, now it is adrift lacking the morality that made it what it is in many of our eyes.

I hope that Mike Ambery can have more success at Aviva , another insurer that needs to find a way back to its the ethical roots of UK life insurance mutuality.

You may note the journey travelled by Standard Life has been a journey channelled by Aviva. UK Life insurers are not progressing in this direction.

You raise interesting points about the ReAssure Staff Pension Scheme and its in-house life insurer sale to Phoenix.  What “secure” means in the context is moot. Should the bulk transfer see Phoenix issue individual annuities and the scheme be wound up, how members benefited should be explained.

Standard Life will have benefits from rolling the scheme into its larger structures.  What are the terms of the deal?  There are no disclosures to ensure such deals can be scrutinised – just content free, mutual admiration pact press releases.

A little research into ReAssure Midco Limited and there are questions.  A summary dating from the Standard Life acquisition is attached.  Risk diversification might have saved the scheme from the LDI debacle.  The 41% loss in asset value in 2022 is very high and greater than the fall in the value of liabilities – quite unusual.  The fall in equity values from £165 million to £77 million suggests sales ahead of the LDI crisis.   Collateral calls may have impacted.  No explanation is provided.

More immediately, the scheme assets at 31st December 2025 were £255.3 million and the liabilities were £236.4 million – a surplus of £18.9 million.  The buy-in cost at 8th of June was £256 million.  Ahead of the deal an employer contribution of £22.6 million was made from “charged” accounts – probably linked to a 2017 agreement.  Life expectancy at 45 for men and women is 29.9 years and 31.5 years respectively – no change to assumptions in a decade so plenty of scope for provision releases against CMI assumptions and for a profit on longevity reinsurance.  A year off life expectancy is circa £6m off liabilities.

But what about the exercise of discretion?  This deal finalises just before new tax rules make it far easier to make one off payments.  So have the trustees obtained for the members something new – even just a catch up payment for the loss in real value of pensions between 2021 and 2024 when inflation was above 5%?

Transaction research is not a feature of the pension risk transfer market – which makes informed decision making unnecessarily difficult.  To learn from sector practice and precedents is not part of the way pensions operate.  That is no help to regulators, members or sponsors.

We looked three years ago at how Aviva made £1 billion pre tax profit from selling its pension scheme to itself.  The specifics of individual schemes are significant – but not as important as the industry’s confidence that nobody’s looking.  Informed decisions are what Government expects of trustees.  But how can they or regulators make good decisions without data and analyses?

If TAS300V2.1 were a major consideration to ensure quality decision making, and public disclosures were required, standards of work in the sector would be transformed.

Lack of scrutiny of actuarial work; poor disclosures and no real analysis by the consultants of transactions:  the consequence is poor decision making.  Time to implement the Morris and Kingman Report recommendations – or at least provide the responsible regulator, Financial Reporting Council, with a budget for actuarial scrutiny work.  We need an Actuarial Standards Board

The numbers this relates to are below