Standard Life succession is focus for City

STANDARD Life was last night under increased pressure to spell out its succession planning strategy amid growing criticism of the sudden departure of senior executive Trevor Matthews.

Shareholders and analysts said the process of putting in place a successor to Sandy Crombie, the company's chief executive, could have been handled better and that Matthews' departure would lead to further negative sentiment .

Matthews, the highly regarded chief executive of Standard Life's UK life and pensions division, quit on Tuesday night to join rival Friends Provident – a move said to have been precipitated by the thwarting of his ambition to win the top job at Standard.

Yesterday Crombie was putting a brave face on events which have led to questions over the leadership of the £5 billion Edinburgh-based company.

Unveiling the figures for new business sales, he claimed he had no plans to retire and that Matthews' resignation had no effect on his future.

However, Crombie's attempt to shrug off the recent problems was in marked contrast to the view of analysts and investors.

ING analyst Kevin Ryan said the departure of Matthews had appeared "clumsy".

"It will bring to a head demands from some shareholders for a proper succession plan," he said. "Clearly this has blown up because there hasn't been one."

Barrie Cornes of Panmure Gordon said the issue now clearly had to be put to rest. "Perhaps they should have before, perhaps they have already."

Despite Matthews' strong reputation, Cornes did not believe Standard Life's management had been weakened by his departure, nor was it more of a takeover target than before.

Analyst sentiment was shared by institutional investors.

One fund manager with a holding in Standard Life said: "I cannot think of another company in the insurance sector where there is so much focus on the boss's retirement date."

Despite these view, Crombie was yesterday refusing to bow to the pressure.

He told The Scotsman: "At the moment I have no plans to retire, and I don't think it is valid to have a public line of succession laid out."

He said that, while he discussed the issue of his eventual departure and succession with his chairman, no statement would be made before the nomination committee deemed it appropriate.

Asked if the long-standing speculation was frustrating, Crombie said "frustration is a luxury I cannot afford".

Pressed on what impact Matthews' departure would have on his plans he said: "It's not affected my plans in any way."

Crombie will take up Matthews' role while a successor is sought.

Sources within Standard Life claimed Matthews – who will not take up his new position for six months – was driving the speculation about succession, seeking an effective anointment well ahead of Crombie's departure .

Shares in Standard Life opened 4 per cent down yesterday, despite revealing new business sales for 2007 were slightly ahead of expectations, as analysts praised Matthews' turnaround in his unit and popularity in the City.

Shares later recovered, but closed down 2.75p at 225.25p, below the 2006 flotation price.

LATE DIP CANNOT HIDE RECORD YEAR FOR NEW BUSINESS

STANDARD Life reported a record year of new business sales for 2007 yesterday, although there was a sharp fall in the final quarter.

The company moved yesterday to reassure analysts, saying it expected to achieve all its "financial and efficiency targets for 2007".

These include a 9-10 per cent return on embedded value and savings, such as stripping out £30 million in costs from the UK life and pensions unit.

Worldwide life and pension sales rose 12 per cent to £16.3 billion last year, around 3 per cent ahead of analyst forecasts, with UK life and pension sales up 15 per cent to £13.2bn.

But fourth-quarter sales showed a sharp decline, falling 14 per cent on 2006, including a drop in sales of key products such as self invested pension plans (Sipps).

Chief executive Sandy Crombie said the performance was credible given the turmoil, including in the final quarter.

"If you take a look at the external conditions and imagine yourself in those conditions with money to invest, would you know what to do with it?

"Investors generally, retail investors in particular, might have had pause for though under the circumstances but we, nevertheless did good business in that quarter."

Flagship Sipp sales fell 16 per cent compared to the final quarter of 2006, but Crombie said pension simplification reforms – known as A-Day – had caused a large amount of "one-off" activity and he still saw strong potential in the products, and in Standard Life's ability to sell them.

The firm's finance director, David Nish, also warned that the number of customers cashing in their policies was above the group's long-term assumptions.