Standard Life gives 70 million shares as anniversary bonus

Standard Life will hand out bonus shares worth around 230 million pounds ($462 million) next week as it celebrates a year on the stock market that has seen insurance sales soar and its shares jump over 40 percent.
Britain's fifth-largest life insurer listed last summer, ending eight decades of mutual ownership as part of a recovery plan that has seen the business pull back from its troubles during the equity downturn of 2000-2003, refocusing on less capital intensive and higher-margin products.
Next Tuesday, some 1.7 million shareholders who have held shares in the former mutual continuously from its listing will be granted one bonus share for every 20 held. That will add around 70 million shares - roughly 3 percent - to just over 2.1 billion Standard Life shares currently in issue, though the insurer says past demutualisations and its own internal research indicated there is unlikely to be a major sell-off once the shares are handed out.
Trevor Matthews, the head of Standard Life's core life and pensions business, told Reuters last month that to some extent a sell-off could even be positive and boost institutional ownership - some 65 percent of the FTSE 100 insurer's shares is still held by retail investors.
"Past demutualisations have not seen concerted retail selling after similar such unlockings, and inertia appears to be a significantly more powerful force," Cazenove said in a research note this week. "Both our own anecdotal findings and the company's more rigorous polling appear to support this."
Shareholders who hold shares in the Standard Life Share Account will get their bonus stock by July 12, whereas shareholders with certificates will receive additional certificates from July 23.
Standard Life shares were trading on Friday at around 330-3/4 pence - up 44 percent from its float price of 230 pence, helped by its own sales and margins recovery but also by the strength of the wider equity market and by the life insurance sector, for which 2006 was a boom year.
But the group still faces challenges: its customers cash in their policies early at a higher rate than its rivals' and it is still struggling to boost low profit margins. It gave no update on customer attrition in May, when it presented forecast-beating sales numbers for the first quarter, though departures are understood to have peaked last autumn, following its July listing and April pension rule changes.
"The biggest challenge going forward is to keep their leading market position in the SIPP (self-invested personal pension) and wrap markets - the question is how sustainable that is, with everyone is trying to get in on the party," analyst Peter Eliot at Man Securities said.
Standard Life has bet much of its turnaround of the SIPP market, which it says could grow to 100 billion pounds from the current 35 billion, with 145,000 customers. Standard Life had 30,800 customers at end-March. The insurer is due to publish sales figures for the second quarter of 2007 on August 7.