Standard Life: Demutualisation and IPO Programme

In 2000, under guidance from the Board, Standard Life members voted to keep the firm mutual. This surprised many commentators as it came at a time when several of their competitors had decided to demutualise and list on the London Stock Exchange. Since 2000, however, the life insurance market has changed, and with it the performance of Standard Life. In 2005, the company announced steps to proceed with demutualisation and a subsequent flotation.

Since the original decision, there have been several developments that have influenced Standard Life's u-turn. In 2000/2001, the decline in the stock market undermined the capital base of a number of companies in the insurance sector, including Standard Life, whilst the low interest rate-low inflation environment has resulted in lower long term returns on investments. In addition, the bulk of Standard Life's capital base was made up from With Profit Funds, which are a shrinking market sector, and there was a prospect that an ever smaller number of investors would bear the risks of the business, whilst not being able to provide the level of capital the business required to grow. Finally, in 2004, the Board announced that it could no longer provide 'Benefits of Mutuality' in terms of increased policy payouts for holders. CEO Sandy Crombie then launched a group-wide strategic review to revitalise the business in the new post 9/11 economic climate. Part of this was determining the most suitable capital structure for the firm going forward.

Alternatives to demutualisation were considered. Staying open to new business as a mutual firm would only exacerbate the issues discussed above. Demutualisation also held the advantage that benefits for members could be paid out immediately in the form of cash or shares, whereas policy payouts would occur over the long term. Therefore the Standard Life Board took the decision that demutualisation was the best solution and mobilise the organisation towards this goal!

How Bluerock helped...

Bluerock programme managed the Standard life Demutualisation Programme for the final, vital 9 months up to delivery. The Programme was of unprecedented scale and breadth, involving the design and implementation of an innovative Scheme of Demutualisation and requiring input and consent from numerous Regulators and Experts, as well as communications with over 5 million policyholders in 146 countries. Over a two year timeline, approximately 450 internal staff, consultants and Advisors worked on the Programme. Greatest achievements during this period included:


    The Bluerock Team managed and delivered the Demutualisation Programme (450 resources, £150m+ budget) on time and budget, reporting directly to Programme Director and Board Sponsor.

    We managed the Vote campaign, achieving a resounding mandate from the membership - 67% members turnout and 98% vote in favour of proposal (higher than precedents despite pro-mutual history)

    The demutualisation programme planned and delivered an unprecedented logistics exercise to mail the Vote and Circular pack to over 5 million policyholders and eligible members in 146 countries, 3 languages and 50 pack variations

    Bluerock facilitated the stakeholders review of the Scheme. The Scheme was sanctioned by the members, FSA and EEA regulators, Independent Expert, WP Actuary and Court of Sessions. No delays, criticism or official objections were recorded over the process

    Our consultants were involved with the IPO exercise interfacing to multiple stakeholders, including external and internal legal advisors, bankers, PR specialists and Senior Standard Life Directors and worked to achieve and optimum share price for Standard Life


Bluerock's involvement was integral to both the timely delivery of key project areas, and leading and promoting the understanding of Standard Life's overall programme goals.

Bluerock was integral to the overall success by providing the leadership, vision and driving force behind the programme. In such a complex initiative, spanning multiple parties across the world, these qualities ensured that the path to success was well managed and the Board's strategic vision was fully achieved.







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