Edinburgh, Scotland-based Standard Life plc is repositioning itself in the financial services industry, shifting its focus away from insurance and towards retirement savings and investments, the company’s executives said on Monday.
Gerry Grimstone, chairman of Standard Life, said that low interest rates have presented an extremely challenging operating environment for life insurance companies. As a result, the company has turned its attention to the growing retirement savings business.
“We have really turned ourselves from being a traditional life insurance company into one of the U.K.’s largest savings and investment companies, and I think that’s a trend you’ll see elsewhere in the world,” Grimstone said, speaking to reporters while in Toronto for a Standard Life board meeting. “To be a pure life insurance company at a time of low interest rates isn’t a very easy place to be.”
Grimstone anticipates that interest rates could remain low for another five years, which means continued challenges for insurers.
By expanding its activities on the savings and investment side of the business, particularly in Canada, the company anticipates that it will be able to tap into a key growth opportunity.
“We do see an opportunity in Canada to effectively create a different, more long-term savings business,” said David Nish, CEO of Standard Life.
The company’s decision to appoint Charles Guay as president and CEO of the Standard Life Assurance Company of Canada was a reflection of this new focus, Nish said. Guay, whose appointment was announced in December 2011, had no association with a life insurance company prior to joining Standard Life. Rather, he’d developed an expertise in the savings and investment business – most recently as president and CEO of National Bank Securities – which is precisely the area in which Standard Life was looking to enhance its presence.
The Canadian arm of Standard Life exited the individual life and health insurance space late last year, however the company continues to offer group insurance, which it now positions as part of its group savings and retirement offerings. “It’s really part of our more global group benefit offering,” said Guay.
Although much of its business caters to groups, however, Standard Life is cognizant of the fact that plan members need individualized advice, the executives said.
“What will happen over the long term is that individuals will become much more responsible for their longer term needs – whether that’s income, whether it’s health care, etc.,” said Nish. “It’s important always to recognize that there will be a big role for advice.”
He noted that Standard Life takes steps to ensure members of group plans have access to tools and resources to understand their choices and make decisions best suited to them.
“It’s not a one-solution-fits-all approach that we have at Standard Life,” added Guay. “We have a strong ability to personalize the solution to their needs.”