ii view: profits swell at high-yielder Standard Life

First-half results to 30 June

• Operating cash generated up 6% to £745 million
• Reported loss of £179 million is an increase on £156 million a year ago
• Adjusted operating profit up 25% to £563 million
• Capital cushion or Shareholder Capital Coverage Ratio (SCCR) down 7% from late December to 169%
• Interim dividend up 2.6% to 28.05p per share

Guidance:

• On track to achieve cumulative three-year total cash generation of £5.1 billion between 2024 and 2026
• On track to achieve adjusted operating profit for 2026 of £1.1 billion

Chief executive Andy Briggs said:

“The £2 billion acquisition of Aegon UK and our recently announced UK PRT partnership will further strengthen our capabilities and customer offering.

“Standard Life champions the belief that everyone's journey to and through retirement can be better and we look to the future with confidence."

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ii round-up:

Standard Life (LSE:SDLF) today flagged its previous £2 billion acquisition of Aegon UK and other business partnerships as helping underpin future growth, with the pensions provider on track to achieve 2026 financial targets.

First-half adjusted operating profit up 25% from a year ago to £563 million keeps it on track to achieve its target of £1.1 billion of annual adjusted profits. An interim dividend of 28.05p per share, payable to eligible shareholders on 29 October, is up 2.6% from last year.

Shares in the FTSE 100 company rose 0.5% in UK trading to a record high having come into these latest results up by a quarter so far in 2026. Rival Aviva (LSE:AV.) is up by less than a tenth during that time. The FTSE 100 index has gained almost 9% year-to-date.

Previously called Phoenix Group, the company has acquired over 100 insurance brands in its time including Pearl Assurance and Abbey Life. The April acquisition of Aegon UK adds to Pension Risk Transfer (PRT) partnerships recently agreed with the likes of Prudential Financial of the US and Goldman Sachs.  

Half-year operating cash generation up 6% to £745 million leaves Standard on target to reach a cumulative three-year target of £5.1 billion between 2024 and 2026.

A reported loss after tax of £179 million deteriorated from a loss of £156 million in H1 2025, hindered by costs for hedging policies taken to protect the group’s capital cushion against interest rate and equity market volatility.  

A capital cushion, or Shareholder Capital Coverage Ratio (SCCR) of 169% was down 7% from late December due to debt repayments made, although it remains comfortably within management’s target range of 140-180%.

Broker Morgan Stanley reiterated its ‘overweight’ rating following the results, highlighting target price of 980p per share.

A Capital Markets Day is scheduled for 30 November.

ii view:

Started in 1857, Standard Life today supports 12 million customers in managing assets under administration of £333 billion. As well as Standard Life, other brands include Sun Life, Phoenix Life and ReAssure. High competition and pressure on life and pensions providers to reduce costs has allowed Standard Life to grow via acquisitions and then strip out costs.

For investors, hedging policies executed to protect the group’s capital cushion have, and may continue to hinder, fully reported profits. Consumer cost pressures such as rising energy bills could push some customers to reduce pension contributions. Competitors such as Aviva and Legal & General Group (LSE:LGEN) are not standing still, while a forecast share price-to-net asset value above the three-year average may suggest the shares are not obviously cheap.

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More favourably, acquisitions such as that of Aegon UK continue to be made, assisting growth. Previously outlined management targets for cash generation and adjusted profit remain on track to be achieved. The change of name to Standard Life should make the group more recognizable to potential new customers, while management’s focus on reducing debt acquired from previous acquisitions has seen a targeted leverage ratio of 30% achieved early.

In all, and despite ongoing risks, more than five years of consecutive annual dividend increases and forecast dividend yield of around 6% will likely keep investors interested in this UK savings giant.

Positives:

• Potential for more bolt-on acquisitions
• Attractive dividend payment (not guaranteed)

Negatives:

• Regulatory changes can impact
• Uncertain economic outlook

The average rating of stock market analysts:

Strong hold