* Says organic growth is primary strategy
* Says won’t sell Canada unit, banking business
* Says operational synergies “difficult” for insurers
London: British insurer Standard Life will stay out of an anticipated bout of industry consolidation as it is too dissimilar to its rivals, its chief executive Sandy Crombie said.
Standard Life, the UK’s fourth-biggest life insurer by market value, will continue to pursue organic growth, and has no plans to sell its underperforming Canadian operation or its banking business, Crombie told Reuters in an interview.
“We have a very different business model from the rest of the sector and are not attracted in the main to looking at what they’re doing, or heading backwards into their business model,” Crombie said.
“You would expect us to continue to look for organic means of growth as our primary strategy for the future.”
Speculation of a wave of takeovers in the insurance sector has been rife since entrepreneur Clive Cowdery last year launched acquisition vehicle Resolution, which aims to acquire and restructure life insurers and asset managers.
Resolution, modelled on an earlier Cowdery venture which focused on buying closed life funds, has yet to complete his first deal, having had a takeover approach for Friends Provident rejected as too low last month.
Crombie said profitably merging life insurers was difficult because their reliance on tailor-made computer systems reduced the scope for operational cost savings.
“If you look at the old Resolution, most of its successes were in financial synergies rather than operational synergies. It’s difficult in the traditional life sector to get operational benefits because the products tend to reside on proprietary systems.”
Crombie also said he was unfazed at the prospect of an increase in competition as upcoming regulatory changes force some rivals to mimic its strategy of specialising in products that require minimal capital outlay.
“We have the advantage of seeing them coming, and I would anticipate that Standard Life will remain in the lead,” he said.
British insurers will be banned from paying commission to financial advisers who sell their products from 2012.
That will bring the wider sector into line with Standard Life, which largely eliminated commission payments as part of a drive to boost profits and capital after it demutualised in 2006.
Crombie, 60, who is due to step down once Standard Life completes an ongoing search for his successor, added that he did not rule out taking on another major role.
“In my mind I’m not retiring. I feel fit, healthy and vigorous, and wanting to be involved in a significant way,” he said.
“I’ve just kept an open mind about what might be next for me.