March 16 (Reuters) - British insurer Standard Life, formerly known as Phoenix Group, reported a better-than-expected rise in annual profit on Monday, buoyed by growth in its capital-light pensions and
Standard Life shares fall as slowdown in pension-risk transfers clouds profit beat
Standard Life's 2025 Financial Performance and Market Reaction
By Rishab Shaju
March 16 (Reuters) - British insurer Standard Life reported a larger-than-expected rise in annual profit on Monday, but a significant drop in book value and investors' caution over a slowdown in the bulk annuity market sent shares of the firm down 3.2%.
Book Value Decline and Financial Targets
Standard Life, formerly known as Phoenix Group, said book value, a key indicator of balance sheet strength and risk-absorbing capacity, was 244 million pounds ($323.2 million) in 2025, compared with 1.21 billion pounds a year earlier.
However, the firm said it remains on track to meet its 2026 financial targets and expects to deliver 500 million pounds of excess cash in 2026.
Slowdown in Bulk Annuity Deals
Trends in Corporate Pension Risk Transfers
SLOWDOWN IN BULK ANNUITY DEALS
Deals for corporate pensions, also known as bulk annuities, have expanded in recent years as companies seek to offload risks tied to final salary pension schemes to insurers such as Standard Life.
Impact of Higher Interest Rates on Buyouts
However, stronger funding levels at corporate pension schemes, boosted by higher interest rates, led some companies to postpone buyouts, easing the immediate need to transfer pension liabilities to insurers such as Standard Life.
Finance Chief's Outlook on Pension-Risk Transfers
"We think this (pension-risk transfers) will come through in the form of 40 to 60 billion pounds of pension risk transfers a year, although 2025 was actually a slow year," finance chief Nicolaos Nicandrou told Reuters.
Geopolitical Risks and Company Exposure
Impact of U.S.-Israeli Conflict with Iran
The ongoing U.S.-Israeli conflict with Iran has impacted operations and finances for several companies globally.
Standard Life's Exposure to the Middle East
Nicandrou said Standard Life's direct investment exposure to the Middle East remains "modest". The company does not have significant operations in the region.
Hedging Against Geopolitical and Economic Risks
"Our economic balance sheet is hedged against geopolitical risks. Whether inflation goes up or down or rates go up and down, it's an approach that we've planned for a number of years," he said.
Profit and Cash Generation Beat Expectations
Standard Life's adjusted operating profit before tax for 2025 rose to 945 million pounds, while total cash generation reached 1.71 billion pounds.
Analysts in a company-compiled consensus had expected profit of 937 million pounds and total cash of 1.66 billion pounds.
($1 = 0.7547 pounds)
(Reporting by Rishab Shaju in Bengaluru; Editing by Sherry Jacob-Phillips, Harikrishnan Nair and Jan Harvey)
