Standard Life haemorrhages £5.6bn from Gars

Standard Life was hit by net outflows of £3.7bn during the first half of 2017, driven by money being pulled from its mammoth Global Absolute Return Strategies fund, while the figures revealed its has nearly doubled its advisers in two years.

The £23bn fund saw net outflows of £5.6bn, which Standard Life attributed to weaker short-term investment performance during 2016.

Total redemptions across Standard Life increased to £24.4bn, leading to net outflows of £3.7bn.

Overall Standard Life’s assets under management increased by 1 per cent to £361.9bn.

Nonetheless the company’s operating profit before tax increased 6 per cent to £362m as Standard Life prepares for its merger with Aberdeen Asset Management – expected to take effect from Monday (14 July).

Keith Skeoch, chief executive of Standard Life, said: “We continue to see the benefits of targeted investments to further our diversification agenda, the success of our newer investment solutions and the ongoing focus on operational efficiency.

“This has allowed us to grow assets, profits, cash flows and returns to shareholders. “With the proposed merger with Aberdeen on track for completion on 14 August we are ready to accelerate the pace of strategic delivery as we open the next chapter of our transformation to a diversified world-class investment company.”

Standard Life’s adviser platforms saw record retail net inflows of £3.4bn, with wrap inflows up 48 per cent to £3.1bn and Elevate inflows up to £600m.

Total assets under administration on its platforms increased by 11 per cent to £49.2bn.

The company said these flows were driven by growth in the pension market, particularly defined benefit transfer values and pension freedoms.

It cited the increasing number of consumers moving into its drawdown propositions as an example of this, with total assets invested increasing by 11 per cent to £18.2bn.

Standard Life’s operating expenses increased by £15m – or 3 per cent – as £29m was added to its cost base through the acquisition of Elevate and its continuing expansion of advice arm 1825.

It said that if Elevate and 1825 were excluded, absolute expenses for the company would have fallen.

The latest figures show that 1825 how has 73 financial planners with more than 8,600 clients and assets of £3.4bn. This is from a standing start with the acquisition of Pearson Jones in May 2015, which brought in assets of £1.1bn and 39 advisers and paraplanners.

Direct Line rebases interim dividend as as motor insurance premiums boost first-half profit

The FTSE 100-listed firm said operating profit from ongoing operations rose by 9.5% to £354.2mln for the six months to June 30, up from £323.6mln a year earlier

Direct Line Insurance Group PLC (LON:DLG) unveiled a jump in its interim dividend following a rebasing of the payout as it reported solid growth in first-half profit as motor insurance premiums rose.

The FTSE 100-listed firm said operating profit from ongoing operations rose by 9.5% to £354.2mln for the six months to June 30, up from £323.6mln a year earlier.

The group – Britain’s largest motor insurer, whose brands include Churchill, Green Flag and Privilege – said its gross written premiums increased by 5% to £1.69bn, with a 10% rise in gross written motor premiums.

The company raised its interim dividend 38.8% to 6.8p per share, up from 4.9p last year.

Paul Geddes, Direct Line’s CEO said the group is rebasing the regular dividend upwards “to reflect its confidence in the Group’s earnings and the progress the business has made since the IPO nearly 5 years ago when the Group’s dividend policy was previously set.”

Aim to grow regular dividend in line with business

He said: “We aim to grow the regular dividend in line with business growth, which we expect to be in the region of 2% to 3% per annum over the medium term.”

Geddes added: “The investments we have made and continue to make in our business have delivered value for our customers and shareholders.

“As a result, we reiterate our 93% to 95% combined operating ratio target for 2017 and also extend this ambition over the medium term.”

Back in March, Direct Line has reported a drop in 2016 profits, dented by a shock decision last month by the Lord Chancellor to dramatically change the way in which personal injury claims are assessed

The firm posted pre-tax profits of £353.0mln for the 12 months to December 31, down from £507.5mln a year earlier, reflecting the one-off impact of using the new Ogden discount rate of minus 0.75%.

The group’s combined operating ratio from ongoing operations increased to 97.7% as a result of the reduction in the Ogden rate, partially offset by improved current-year underwriting performance and favourable weather claims.

Before the Ogden rate adjustments, Direct Line said that figure had fallen to 91.8%, down from 94.0% in 2015.

Grenfell Tower fire: insurance industry issued fire risk warning one month before tragedy

The UK’s insurance industry issued a warning relating to flammable external surfaces on high rise buildings just one month before the Grenfell Tower fire that left at least 79 people dead.

In a statement, the Association of British Insurers said that it had been calling on the Government to review its standards for building regulations for the last eight years and that it had issued a warning in May specifically relating to the combustible external cladding on buildings like the Grenfell Tower and how it can cause fire to spread.

Councils across the country have launched emergency reviews of their towers in the aftermath of the 14 June North London tragedy and over the weekend, the number of tower blocks that failed emergency fire tests rose to 60.

The Department for Communities and Local Government (DCLG) said every tower tested so far has failed the fire safety check.

The fire is believed to have spread across flammable cladding on the outside of the building which was designed to provide insulation and improve the appearance of the 24-storey block.

Communities Secretary Sajid Javid has urged local authorities and housing associations to continue to submit samples “as a matter of urgency” amid a nationwide safety operation.

Councils have been told to prioritise checking the towers they are most concerned over.

Anthem to leave Nevada’s Obamacare market

U.S. health insurer Anthem will no longer offer Obamacare plans in Nevada’s state exchange, the state’s insurance commissioner said on Monday.

The move comes after Republican senators last month failed to repeal and replace Obamacare, former President Barack Obama’s signature healthcare reform law, creating uncertainty over how the program providing health benefits to 20 million Americans will be funded and managed in 2018.

Hundreds of U.S. counties are at risk of losing access to private health coverage in 2018 as insurers consider pulling out of those markets in the coming months.

Nevada had said in June that residents in 14 counties out of 17 in the state would not have access to qualified health plans on the state exchanges. Anthem’s decision to leave the state entirely does not increase the number of “bare counties” in the state, Nevada Insurance Commissioner Barbara Richardson said in a statement.

The insurer will still offer “catastrophic plans,” which can be purchased outside the state’s exchange and are only available to consumers under 30 years old or with a low income.

Anthem blamed the move in part on uncertainty over whether the Trump administration would maintain subsidies that keep costs down.

U.S. President Donald Trump last week threatened to cut off subsidy payments that make the plans affordable for lower income Americans and help insurers to keep premiums down, after efforts to repeal the law signed by his predecessor, President Barack Obama, failed in Congress.

Trump has repeatedly urged Republican lawmakers to keep working to undo Obama’s Affordable Care Act.

Anthem said last week that was pulling out of 16 of 19 pricing regions in California where it offered Obamacare options this year.

It’s time to introduce a crop insurance scheme for Irish tillage farmers

The Irish weather has conspired, yet again, to hole the prospects for tillage farmers below the water line.

Large swathes of cereal crops, particularly in the north of the country, have been flattened by the recent wind and rain.

As a consequence, cereal growers will be gearing up for a salvage operation over the coming weeks, as opposed to the much anticipated bountiful harvest.

Winter wheat crops had been looking particularly well this year. But, in many cases, this potential will not now be realised. The end result will be a dramatic fall-off in the returns which tillage farmers make this year. And the most galling aspect to all of this is the fact no one can be blamed for the carnage that has ensued over recent days.

King Canute tried to hold back the tide many centuries ago. He failed, because it is not possible to control nature. And, in the same vein, Irish tillage farmers have no option but to work with the weather, in all its moods.

Flattened crops will produce reduced yields of lower quality grain. Straw quality and yields will also be compromised. In my own case, I can well remember the impact of poor weather on barley and wheat grown in 2007, 2008 and 2012. The end result was a pretty hefty drain on my own expenses. But one has only to reflect back on the atrocious spell of weather last harvest, which dealt such a blow to cereal growers from Cork right up the west coast to Donegal.

At a fundamental level, Irish agriculture needs a vibrant tillage sector. This fact has been highlighted repeatedly by farm ministers, Teagasc and the hierarchy of the Irish Farmers’ Association (IFA). But a combination of poor grain prices and repeated bad harvests has resulted in the area laid down in crops shrinking significantly over recent years.

And the prospect of yet another challenging harvest coming down the tracks in 2017 is going to make the decision of sowing out ground in grass, as opposed to cereals, all the more attractive for Irish farmers.

It strikes me that the most obvious response to all of this is the introduction of a voluntary crop insurance scheme. And the most obvious candidate to run it is the IFA. The organisation in question already represents the business interests of tillage farmers in a number of ways, the agreeing of malting barley contracts being a case in point. Details can be decided at a later date. But the principle involved would be that of growers paying a modest fee to obtain insurance cover on their crops in the event of weather-related losses incurred at harvest.

There would also be an onus on seed companies, fertiliser suppliers, other crop input businesses and feed merchants to pay into the pot, as they rely heavily on the tillage sector for their livelihoods. Crucially, the envisaged scheme would come into play at a time of genuine crisis for growers across a significant swathe of the tillage sector, as that experienced in 2016.

The reality is that crop insurance schemes work. It is now accepted practice that farmers in the United States will seek cover of this nature on an annual basis, as a matter of course. So why should the same principle not hold for Irish tillage farmers?

Cereal crops are expensive to grow. The cost of seed, fertiliser, sprays and machinery – not to mention farmers’ own time and associated contracting charges – continue to mount up. So surely it’s time to give growers some way of taking the risk out of a weather-decimated harvest, which can make the investment in crop inputs and management systems, made up to that point, count for absolutely nothing.