Aberdeen Group Plc · LSE:ABDN
Aberdeen — Standard Life — H1 2008 Earnings Presentation
27 slides from Aberdeen's earnings presentation, Aug 6, 2008
Slide 1: Standard Life Interim Results 2008
Standard Life Interim Results 2008 6 August 2008 1 Disclaimer This presentation may contain certain “forward-looking statements” with respect to certain of Standard Life's plans and its current goals and expectations relating to its future financial condition, performance, results, strategy and obje
Slide 2: What we will be covering
What we will be covering Group overview Sandy Crombie Financial highlights David Nish Delivering value from an asset managing business Sandy Crombie Questions Sandy Crombie, David Nish and Keith Skeoch 3 Standard Life Interim Results 2008 Group Overview Sandy Crombie 2
Slide 3: Delivering a 'capital lite' strategy
Delivering a ‘capital lite’ strategy PVNBP and New Business Strain 10 5.0% Europe PVNBP Canada PVNBP 9 4.5% UK PVNBP 8 4.0% % New Business Strain 7 3.5% 6 3.0% £bn 5 2.5% 4 2.0% 3 1.5% 2 1.0% 1 0.5% 0 0.0% H1 2005 H1 2006 H1 2007 H1 2008 A robust model in difficult market conditions 5 NBS is calcula
Slide 4: Financial Highlights
Standard Life Interim Results 2008 Financial Highlights David Nish Financial highlights Life and pensions PVNBP 5% to £9.1bn Life and pensions net flows 15% to £2.0bn New business contribution1 4% to £157m EEV operating profit1 51% to £534m RoEV2 1.9% pts to 11.0% IFRS underlying profit1 58% to £345
Slide 5: Net flow trends
Net flow trends 2,500 1,964 2,000 H1 2007 1,714 H1 2008 1,500 1,151 1,079 £m 1,000 500 453 304 225 211 232 (61) 52 32 0 UK Pensions UK Institutional UK Savings & Europe Canada Total (excl Inst Pensions Investments Pens) (500) Strong net inflows in difficult markets 9 Movement in assets under adminis
Slide 6: New business sales
New business sales Core Total PVNBP 10,000 £9.1bn £8.6bn £293m 9,000 £125m Asia-Pacific £419m £513m Europe 8,000 £1,201m Canada £6.4bn £738m 7,000 UK £68m £340m 6,000 £1,212m £m 5,000 4,000 £7,197m £7,151m 3,000 £4,802m 2,000 1,000 0 H1 2006 H1 2007 H1 2008 5%1 increase in PVNBP in 2008 11 (1) The p
Slide 7: Growing returns – 'capital lite' products
Growing returns – ‘capital lite’ products Core H1 2008 H1 2007 IRR Discounted PVNBP NBC NBC Payback margin % years % £m £m Individual pensions 17% 8 1.4% 36 56 Group pensions 15% 10 2.4% 44 31 Institutional pensions >40% 1 1.1% 10 2 Savings and investments 10% 13 0.5% 8 17 Annuities Infinite Immedia
Slide 8: Reducing risk - UK annuity reinsurance
Reducing risk - UK annuity reinsurance Back book management • £6.7bn of UK immediate annuity liabilities reinsured, more than half of the UK total of £12bn • Longevity risk for shareholders significantly reduced • A positive impact to EV operating profit of £119m1 in H1 2008 • A positive impact to I
Slide 9: IFRS underlying profits
IFRS underlying profits Movement in IFRS underlying profit (£m) 20 345 105 36 (10) 12 247 (27) (10) 219 pension costs Increased IAS19 Normalised H1 annuity reinsurance underlying profit 2008 underlying profit underlying profit New business deferred annuities Normalised H1 2007 Reserving change on Re
Slide 10: Capital and cash generation
Capital and cash generation Free surplus Required Net worth PVIF Group EEV capital £m £m £m £m £m 31 December 2007 2,204 680 2,884 3,327 6,211 Operating capital and cash generation 208 42 250 - 250 Non operating capital and cash generation (72) 3 (69) - (69) PVIF income statement movement - - - (174
Slide 11: Financial Groups Directive surplus
Financial Groups Directive surplus Jun-08 Dec-07 £bn £bn Shareholders' capital resources 2.6 2.9 Capital resources arising from subordinated debt 2.0 1.9 SLAL long term business funds 2.1 4.4 FGD Group capital resources 6.7 9.2 FGD Group capital resources requirement (3.2) (5.6) FGD surplus 3.5 3.6
Slide 12: Delivering value from an asset managing business
Financial summary • Increase in net flows and new business volumes • Profits up on both EEV and IFRS bases • ‘Capital lite’ and cash generative with strong IRRs • Balance sheet resilience • Dividend growth of 7% to 4.07p A robust performance in challenging market conditions 23 Standard Life Interim
Slide 13: A distinctive approach to delivering value
A distinctive approach to delivering value An asset managing business building valuable customer relationships with leading service and compelling propositions • Creating capital efficient innovative products • Opening new routes to markets • Leveraging investment management expertise and performanc
Slide 14: SIPP - enhancing the proposition
SIPP - enhancing the proposition Core A programme of enhancements in 2008 to build further on our market leading proposition: • Protected rights • Variable annuity offering – ‘guaranteed income plus’ • Fund platform • E-commerce • Safer Haven offering - cash accounts, capital plus and insured funds
Slide 15: UK Group Pensions leadership
UK Group Pensions leadership Core • Market-leading proposition UK Group Pensions funds under management 16.0 • Efficiency through scalability 15.0 15.0 GR - £15.0bn FUM at June 2008 CA 13.5 14.0 19% • The corporate arena shows a continued 12.0 11.5 trend towards: 10.0 – Unbundled to bundled - £100bn
Slide 16: Asia-Pacific - potential from growing markets
Asia-Pacific - potential from growing markets Core India - HDFC SL • Entering the healthcare market H2 2008 Asia-Pacific - APE • Financial consultants increased to 162,000 (FY 2007: 132,000) 60 Hong Kong • Increased distribution through China HDFC Bank - Centurion merger 50 India GR CA • Potential I
Slide 17: Standard Life Investments - a resilient asset management business
Standard Life Investments - a resilient asset management business Core Institutional business Split of total third party FUM • Increasing popularity of specialist and absolute return products • Standard Life Investments well positioned due to breadth of Retail offering and skills: business – Global
Slide 18: Driving efficiency
Driving efficiency - targeted benefit profile Efficiency Cumulative benefit profile 150 £146m Reduction in corporate costs 135 £131m Reduction in L&P costs Additional cost savings 120 105 Cost Savings (£m) 90 £75m 75 60 45 30 15 0 2007 actuals 2008 target 2009 target Remain on track to deliver cost
Slide 19: Appendix
Increasing Shareholder value is our objective Delivery Increased Efficiency Shareholder value Opportunity Working to increase our core RoEV 37 Appendix 38 19
Slide 20: Components of Standard Life value
Components of Standard Life value Illustrative key components in excess of EEV (not to scale) Standard Life EEV New markets Asset Cost efficiency New Business Value to Standard management Life Shareholders 277p per share India Value in £71m of SIPP as at China excess of Continuous Wrap 30 June 2008
Slide 21: Group EEV profit
Group EEV profit H1 2008 H1 2007 £m £m EEV operating profit before tax 534 353 Non-operating items Long-term investment return and tax variances (516) 31 Effect of economic assumption changes 40 52 Other GLF fair value movements (27) - Restructuring expenses (44) (3) Volatility arising on different
Slide 22: IFRS underlying profit
IFRS underlying profit H1 2008 H1 2007 £m £m Life and pensions UK 221 91 Canada 66 64 Europe 24 19 Other life (16) (6) Total life and pensions 295 168 Investment management 25 42 Banking 12 14 Healthcare 8 2 Total non-life excluding corporate costs and other 45 58 Group Corporate Centre costs (25) (
Slide 23: Inter-relationship of PVIF and cash (UK)
Inter-relationship of PVIF and cash (UK) Movement in VIF 2,900 2,700 2,500 2,300 £m 2,100 1,900 1,700 1,500 Opening Release NB VIF Return on Variances Non-EVOP Closing from VIF VIF within New business creates EVOP Expected cash £100m more value than released from VIF cash used (net of tax) Movement
Slide 24: Investment performance
Investment performance Active investment performance by product group as at 30 June 2008 0 25 % Rank 50 75 1 year 3 years 5 years 10 years 100 Weighted With Profits Mutual Unit-Linked Unit-Linked Corporate SLPF Irish and M.W.A third Average Active Funds Life Pensions German Ex party assets Group Lif
Slide 25: Asset backed securities - total
Asset backed securities - total Exposure by type and credit rating As at 30 June 2008 Not ABS Type AAA AA A BBB BB B Rated Total £m £m £m £m £m £m £m £m Total ABCP - - - - - - 7 7 Auto ABS 18 - - - - - - 18 CMBS 1,063 436 266 386 - - 149 2,300 Credit Card ABS 312 - - - - - - 312 RMBS 2,486 63 6 80 -
Slide 26: Asset backed securities - policyholder
Asset backed securities - policyholder (unit linked) Exposure by type and credit rating As at 30 June 2008 Not ABS Type AAA AA A BBB BB B Rated Total £m £m £m £m £m £m £m £m Policyholder - unit linked ABCP - - - - - - 7 7 Auto ABS 9 - - - - - - 9 CMBS 333 12 15 20 - - 2 382 Credit Card ABS 78 - - -
Slide 27: Asset backed securities - third party
Asset backed securities - third party Exposure by type and credit rating As at 30 June 2008 Not ABS Type AAA AA A BBB BB B Rated Total £m £m £m £m £m £m £m £m Third party ABCP - - - - - - - - Auto ABS - - - - - - - - CMBS 228 208 169 220 - - 10 835 Credit Card ABS 39 - - - - - - 39 RMBS 414 - - 38 -