Standard Life operating profit up 9 per cent

The rise saw operating profits hit £723 million as chief executive Keith Skeoch took a sizeable pay cut, from £3.46 million to £2.75 million, according to the life insurer’s annual report.

The news comes at the end of a year that has seen the financial giant moving towards the asset management sector and away from life insurance as a result of new pension rules.

While still maintaining a large business managing workplace pensions, SL has stopped writing annuities.

The changes have been supported by the building up a broader geographic spread of clients, the firm said on Friday.

The strong performance also comes in spite of worries about the Chinese economy early last year and broad outflows from funds in the aftermath of Britain’s vote to leave the European Union.

Assets under administration rose 16 percent to 357 billion pounds, above a forecast 335.4 billion.

Retail assets were up 48 per cent from £42.6bn to £62.9bn, helped by the acquisition of Elevate which added £11.1bn in AUA when the deal completed last year.

“Our targeted investments and diversification helped increase our assets”, Mr Skeoch told a media call.

However, fund arm Standard Life Investments’ flagship GARS multi-asset strategy saw 4.3 billion pounds in net outflows.

“Going into 2017, we expect the outflows from GARS to remain elevated,” Barclays analysts said in a note, reiterating their negative recommendation on the stock.

SL also said it has set aside £175 million in provisions for compensation following the Financial Conduct Authority’s review of annuity sales last year.

Mr Skeoch, who was paid £2.75 million in 2016 following £3.46 million in 2015, said: “Standard Life continues to make good progress towards creating a world-class investment company. We have increased the pace of strategic delivery, against a backdrop of volatile investment markets, with growth in assets, profits, cash flows and returns to shareholders.

“Despite industry headwinds, we are benefiting from our strengthening global brand and strong long-term relationships with a well diversified range of clients and customers. The acquisition of Elevate has strengthened our leading position in the advised platform market while the increase in the stake in HDFC Life and the proposed combination with Max Life will increase our exposure to the attractive and fast growing Indian market.

“We are already seeing the benefits of targeted investments to further our diversification agenda, including the success of our newer investment solutions, and the sharpened focus on operational efficiency. This increased pace of strategic delivery will ensure that we continue to meet changing client and customer needs, and generate growing and sustainable returns for our shareholders.”