Page 48 - Articulate Files

this meant that in order to achieve demutualization and

ultimately an IPO he had to create a positive gap in both
capital and cash flow. After all, he would be ultimately

asking people to invest in a company which at that moment

had no cash and assets that were not covering costs.

The review lead to the recognition that he had to find a way

forward that would not utilize capital but rather release

capital for growth and cash for payment of dividends. SL
had to become more efficient which meant both that costs

had to be cut dramatically and infra-structure, that could not

be used effectively, removed. It meant not paying
commissions to intermediaries for selling products. In

addition, higher value customers had to be found which

meant developing new routes to markets and the opening

up of new distribution channels.

One area of the business that shone was the asset

management arm, Standard Life Investment. To a certain
extent, it was the SLI business was to lead the way towards

IPO.

By late 2005 Standard life had returned to profitability and

demutualization had been brought to a successful outcome

in May 2006.

The change from mutual to PLC also required a shift in

behaviour at Standard Life. Claims had been made that it
was overstaffed and under-managed, that managers were

profligate in their growth projections and that some senior

management lacked fundamental understanding of the

business particularly the term – risk.