Standard Life sees £100m extra savings at revamped business

Standard Life Aberdeen said it expected to generate at least £100m of extra savings after merging with Aberdeen Asset Management and selling its life insurance business to Phoenix Group.

The asset manager said the net savings under its new business model would take effect by the end of 2020 and would be on top of announced cost savings of £250m from combining with Aberdeen.

Standard Life will make the savings by means such as cutting out duplication, slimming down management and support functions and combining teams currently working in different buildings. It said the cost of making the savings would be about £60m, incurred in the years to 2020.

The company announced the extra savings as it published details of the £3.3bn sale of Standard Life Assurance to Phoenix, Britain’s biggest operator of closed life and pension funds. Phoenix announced a £950m capital raising to help fund the acquisition earlier on 30 May.

Standard Life reiterated plans to use the £2.3bn cash element of the deal to return £1.75bn to shareholders. Standard Life will own 19.99% of Phoenix after the sale and will have the chance to manage investments for Phoenix and sell products to its customers.

The completed Aberdeen merger and sale to Phoenix will turn Standard Life into a company focused on asset management and shedding the insurance business that was its heart when the company was founded in 1825.

In a circular to shareholders, Standard Life chairman Gerry Grimstone said: "The sale completes the transformation of the Standard Life Aberdeen Group into a capital-light business and accelerates our strategy of becoming a world-class investment company. As part of this transformation, a revised operating model has been developed […] Successful implementation of the revised operating model is expected to deliver at least £100 million of annual net efficiency savings by the end of 2020."