Standard Life plc

welcome to standard life's full year 2025 results presentation i'd like to introduce to stage andy briggs group chief executive officer andy over to you thank you claire good morning and welcome it was a privilege to be here just two weeks ago ringing the opening bell on the london stock exchange and i'm delighted to be here today presenting a standard life plc For more than 200 years, Standard Life has been standing beside its customers. And today, as real life for customers is less predictable, our role as a retirement specialist is more important than ever. So to our agenda today, I'll begin with an update on progress on our strategic priorities and the operating momentum we are building across the group. nick will take you through the detail of our financial performance i'll then return to outline the strategic developments to come before taking your questions when we set out our three-year strategy in 2024 we were clear on the scale of the opportunity in front of us two years on i'm delighted with the progress we've made first we are uniquely positioned in our markets The UK market is one of the most attractive globally for retirement savings and income. Second, strong execution means we're driving better customer outcomes and meeting even more of their needs, deepening our relevance. Third, that in turn is driving profitable growth, which is translating into a stronger balance sheet. We are firmly on track to deliver our 2026 targets. All of this supports strong shareholder returns and creates financial flexibility that gives us more strategic optionality than ever before. Our strategy is underpinned by three strategic priorities, grow, optimise and enhance. Two years into our three-year strategy, we delivered material progress across each. To grow, we strengthened our products and engagement capabilities. Following product launches in 2025, we now have a full product suite to support customers across all stages of their retirement journey. The launch of our advice proposition and our wide range of digital offerings from our family finance hub to our mixed income builder tool are all helping customers navigate their retirement journey, unlocking the ability to further engage and support households with excellent budgeting and planning options. Within Optimize, our in-house asset management expertise continues to enhance returns and deliver better customer outcomes. Deleveraging remains a clear priority, and we're driving progress here. We paid down a further £200 million of debt in December, which was underpinned by business growth, improving our leverage ratio to 33%. On enhance, we've delivered £180 million of run rate cost savings ahead of expectations again as we leverage technology to reshape our organization. Lastly, our migrations are progressing well with 75% of customers now on end state platforms up from 45% in 2024. To summarize, our colleagues have delivered two years of meaningful operational progress across the board. and I know that there's much more to come from standard life. Our strategic progress is translating into strong financial performance across cash, capital and earnings. Operating cash generation has grown at a 13% CAGR over the past two years and we remain confident in mid single digit percentage growth into the long term. Our growing business is generating surplus capital, which we are currently using to strengthen the capital position by paying down debt. Even through our deleveraging program, we remain in that upper half of our solvency range. Finally, on earnings, we remain firmly on track to achieve our circa 1.1 billion operating profit target in 2026, having delivered another year of strong operational performance. And we continue to grow our dividend up by 2.6%. Now I've had the privilege of working in this sector for nearly 40 years and maybe it's just me but I think the UK retirement market has never been this exciting. The 3.6 trillion pound market is set to grow by 70% over the next decade driven by structural long-term demographic trends including the aging population and the shift to defined contribution. On the top of that, on the right of the side, we see encouraging regulatory and political proposals that create additional tailwinds to our industry. These will accelerate the existing structural growth drivers in the market, so we see growth potential beyond this 70%. Through our active role in shaping the market and the strategy we've defined, Standard Life is well positioned to benefit from these tailwinds. And better still, in the fast-growing market, we're the only scale player solely focused across the full retirement and savings lifecycle. And our ambition is to grow faster in the market and gain further market share. On this slide, we can see strong flows in each market. In workplace, our ambition is to consolidate our top three position as this market grows rapidly and concentrates down to fewer providers. In retail, we're looking to move from a top 10 to a top 5 position, again in a rapidly growing market. And in retirement solutions, we aim to maintain a top 5 position across individual annuities and PRT combined. Our success is underpinned by our competitive advantages. I will come on to these in more detail later. But I will highlight here that the diversification of our business model across the capital like pensions and savings and capital utilizing retirement solutions brings capital efficiencies and customer benefits. Whether it's joining the workplace at 18 years or staying and consolidating in retail or securing income in retirement through our annuities business, we are well positioned to serve our customers and their evolving needs at all life stages. In workplace, we're a scale player with 3 million and growing customers. Winning in workplace requires three things, a leading employer proposition, excellent customer service and scale driven cost efficiency. And we are strong on all three of these. Employers are the key decision makers here and our leading employer proposition is underpinned by our award winning master trust. and our sustainable multi-asset proposition, one of the UK's largest sustainable default funds supporting millions of workplace members. In 2025 we delivered several sector firsts ranging from new tools to supporting families to FCA aligned sustainability labeling to Shariah compliant offerings. Very high on the agenda for employers is excellent customer service. I hear from employers time and again that the quality of our service is a key differentiator here. I like to join some of our workplace pictures and employers consistently highlight that we genuinely care about every client and member with quality of service their number one priority. And they say this really stands out when they visit Standard Life. This is enabled by our brilliant colleagues and our digital first member engagement reflected in our app rating of 4.7 stars again with continuous developments. Thirdly, cost efficiency is delivered by leveraging technology and our ongoing migration program, which in turn means our margins continue to expand and are ahead of peers. On the right, you will see that our winning workplace formula is translating through to strong outcomes. An excellent net promoter score of 60. We welcomed 247,000 new workplace members in 2025, up from 226,000 in 2024. And we won over 200 schemes in 2025. So this market is key for customer acquisition. thirdly workplace assets are up almost 40 percent in three years importantly driven by strong positive net fund flows with 10 billion pounds of gross flows reached this year our market share grew well into double digits so great progress and hugely exciting that this will be further supercharged by market consolidation as minimum fund size is enforced and expected contribution increases Turning to retail. Success in this market is driven by three things. Effective customer engagement, offering products that meet their evolving needs and using digital infrastructure to do all this proactively. We have the first two and a significant opportunity to leverage the third. On the left we engage customers through multiple channels including our award-winning app and telephony guidance. and of course the rollout of our advice proposition which launched last year. Here we're pleased that we can support customers in providing financial advice for a single flat fee regardless of pot size. Second, our full product suite addresses customer needs and now supports them across their entire savings and retirement journey. Distribution has widened as our products are now on both the Quilter and Fidelity platforms and continue to scale with strong investment performance. Thirdly, we have a significant opportunity to leverage digital infrastructure. A key area of focus is building out our Salesforce CRM integration. This is improving our outflows, which Nick will come on to. It gives us deeper insight to support customers, so we can proactively help by nudging customers to make active decisions to ensure they're doing enough at each stage of their journey to and through retirement. I was caught listening last week and heard a great example. In our new pension consultation service, our CRM system uses propensity modelling to proactively target customers who will benefit from this service. The outcomes of our efforts in retail are visible on the right of the page. Our customer satisfaction scores are in the 90s, with 93% of customers rating us good or excellent. This is translating to more digital customer engagement, with total logins up 50% in two years. Lastly on this slide, we're seeing positive customer outcomes feed through to flows. Gross retail flows are £7 billion, up nearly £3 billion over the last three years. But the bottom line is that we're only scratching the surface, and there is so much more to come here. I'm delighted to welcome Angela Byrne as CEO of Pensions and Savings this year as we build the next stage in our journey. In the annuity business, which includes both PLT and individual annuities, winning is all about having a leading employer proposition, excellent member experience and competitive pricing. And our strength in all three is why we're winning in these markets. A comprehensive buy-in and buy-out capabilities and a full product suite means that we can serve customers however complex their needs may be. Member experience is critical in this market. Members want clarity, speed and service, all of which we provide. Our digital capabilities allow customers to understand their position in real time. For example, our digital quote platform underwrites and returns over 90% of individual annuity quotes within seconds. Our core service rates are excellent versus peers, and we're also Amazon Web Services largest European insurance client, a testament to our scale. A diversified business mix is a huge advantage, with most peers effectively undiversified monolines. We also continue to leverage our in-house asset management capabilities to deliver superior returns, particularly through recurring management actions. All of which means we can price competitively and generate attractive returns. All these factors are driving strong outcomes. We nearly doubled our individual annuity market share to 15% from 8% in only two years and expect to grow further. We also wrote our largest ever PRT deal of £1.9 billion. As outlined earlier on this slide, our comprehensive capabilities, which includes our innovative market-leading track record for longevity swap innovations, was key to winning this deal. We are disciplined in our approach to annuities, choosing to deploy up to £200 million of capital and seek value over volume. This is evidenced by the attractive returns generated with lifetime IRRs on our annuity business of more than 20%. This strong performance across workplace, retail and annuities is driving growth in our key financial metric operating cash generation. We are confident of mid single digit OCG growth going forwards. Our £1 billion of free cash flow has doubled from 2023, now comfortably covering our growing dividend of about £550 million. This means dividends and excess cash will both grow as OCG grows, particularly as recurring uses are reducing. 2026 is our final year of using this excess cash to deliver. So from the end of this year, this financial flexibility will enable us to deploy excess cash to the highest returning opportunities in line with our capital allocation framework. And I'll now hand you over to Nick, who can run through the numbers in detail. Nick.

Thank you, Andy, and good morning, everyone. When I stood here a year ago I talked about how our balance sheet pivot had lagged the strategic business pivot and highlighted the key role that operational performance plays in improving our balance sheet quality and enhancing our financial flexibility. The upgraded 2026 financial targets were set with exactly this in mind. One year on, I'm pleased to be reporting a strong set of results for 2025 alongside clear progress on the balance sheet. Starting my presentation with the financial headlines, operating cash generation grew by 5% to $1474 million, with total cash generation at $1711 million, both in line with previous guidance. The solvency leverage ratio improved to 33%, while our solvency cover increased to 176% remaining in the upper half of our operating range. IFRS operating profit was 15% higher at 945 million supported by asset growth and cost savings which reached 180 million on a run rate basis. Adjusted IFRS shareholders equity was 3.1 billion benefiting from a strong increase in the CSM, which partly offset the negative hedge market related impacts. We have recommended a final dividend of 28.05 pence per share, up 2.6% year on year, bringing the total dividend for the year to 55.4 pence per share. This performance puts us firmly on track to deliver all of our 2026 targets. I will now cover the financials in more detail, starting with the performance of our main businesses. Backed by our leading propositions and brand, our pensions and savings business continues to grow assets, margin and profitability. Workplace sold 10 billion of inflows in 2025, 1.5 billion of which were from new scheme wins. We have carried good momentum into 2026 with around 1 billion of wins secured so far this year. Excluding new schemes, growth inflows were 8.5 billion, highlighting the strong flywheel effect of this business. Outflows reflect the higher asset base and the natural attrition from members taking their pensions. Scheme retentions remain high, with only 200 million of scheme losses for the second year running. In retail, our gross inflows continue to improve, up 16% to 7.1 billion in 2025, benefiting from a greater take-up of our drawdown product and a 60% rise in international bond sales. Outflows include 5 billion of withdrawals from customers accessing their retirement savings in the form of annuity income, drawdown payments, or tax-free lump sums. They also include 2 billion of internal transfers to more modern retail products. While the remaining outflows are sizable, we expect them to improve as a percentage of AUA as we increase our focus on retention. In the top right, you can see how these flows have combined with positive market effects to lift the overall P&S asset base by 9%. In the bottom half of the slide, I summarized the drivers of the financial performance for this business. We now publish both OCG and IFRS operating profit driver analysis for our main businesses, which enable us to better explain their respective performance and to express the results as a basis points margin on AUA. Now, given the capital light fee-based nature of the P&S business, we consider IFRS operating profit lens to be the most suitable performance measure here. Average AUA grew by 7% in 2025 to 204.6 billion, which combined with the improved margin of 19 basis points drove operating profit 23% higher to 389 million. This performance highlights our scale advantage and operating leverage with further margin improvement expected near term as the full benefits of our cost savings program come through. Our retirement solutions business also delivered a strong operating performance in 2025. As a reminder, new volumes are not the primary driver of profits here. We run over 40 billion of annuity assets, and it is the management of this large book that drives most of our profitability. We have two main product lines in this business, being individual annuities and pension risk transfers. For individual annuities, product innovation and rising consumer demand, so new premiums grow 20% to 1.2 billion, which is double the 2023 level. PRT premiums were lower at 3.9 billion, reflecting reduced market volumes and our disciplined approach to pricing. In a narrow credit spread environment and competitive market, we took the decision to protect economics and forego volumes. Our overall capital efficiency improved in 2025, with a reduction in capital invested outpacing the overall decline in new premiums. As we look forward, our aim is to deploy up to 200 million of capital to annuities this year, provided we secure sufficiently attractive returns. We remain confident in our ability to win in this market with 1.6 billion of PRT transactions completed or at an exclusive stage in 2026 so far. The bottom half of the slide depicts the drivers of performance for retirement solutions. Given the capital utilizing spread-based nature of this business, we consider OCG to be the most appropriate performance measure. Our effective management of the Inforce book, compared with our scale, efficiency and expertise in delivering portfolio optimisation actions, enabled us to sustain the spread-based margin at 219 basis points. Applied to our growing average AUA of 40.2 billion, produced OCG of 879 million, up 3% year on year. I will now move to the group metrics starting with operating cash generation. The OCG increase to 1474 million was driven by a 6% increase in surplus emergence to 914 million and by another strong performance in delivering 560 million of recurring management actions driven by our developed asset management capabilities. The contribution of the three components that make up these actions are broadly similar year on year, with further detail provided in the appendix. We're confident in achieving our guidance of 500 million recurring management actions each year, as the capabilities and dynamics that underpin this performance are both differentiated and enduring. On the right, you can see the business segment analysis of OCG, which we disclosed for the first time as promised. P&S grew its OCG by 13% to 396 million, equivalent to 19 basis points on AUA. Three quarters of this margin reflects the release of enforced profit based on real-world returns and the benefit of actions to reduce operating costs. The balance reflects the uplift from simplifying fund structures. Retirement solutions accounted for over half of the group's OCG at 879 million, equivalent to 219 basis points on AUA. This reflects the steady release of capital and spread margins as our liabilities run off and the benefit from both yield re-optimization and capital improvement actions. Taken together with profits, Europe and other produce a steady level of OCG at around 200 million per annum. Total cash generation on this next slide combines OCG with cash generated from items that are one-off in nature. As previously stated, we're targeting 5.1 billion of TCG over 24 to 26. Two years into this three-year period, we have delivered TCG of 3.5 billion, comprising 2.9 billion operating and 0.6 billion non-operating capital generation. A further 1.6 billion TCG is expected in 2026, primarily from operating sources. On the right, you can see how the 5.1 billion cumulative TCG is expected to fund our planned recurring uses and the one-time investment to deliver our strategic priorities over this period, generating 1.2 billion of excess cash. This excess is what provides us with the means to reduce our debt stack over the 24 to 26 period. I would like to spend a moment to take stock of the notable transformation in our ability to generate positive excess cash since 2023. By growing OCG from 1.1 to nearly 1.5 billion and by moderating our recurring uses depicted in blue, we have significantly improved our ability to cover the growing dividend shown in orange and generated a rising level of excess cash being 296 million in 2024 and 423 million in 2025 we expect this pattern to repeat in 2026 generating around 0.5 billion of excess cash we deploy excess cash in line with our capital allocation framework which remains unchanged our near-term priority is to deleverage to our 30 percent target We expect to complete this by the end of 26, after which this access will be directed to the most attractive return opportunities across growth investment, targeted M&A, and increasing returns to shareholders. We're very optimistic about the potential future opportunities for our group. Turning next to the group's 2025 solvency walk, where I'm pleased to report an improvement in the drivers of solvency capital. After covering recurring uses, we generated 0.4 billion of net recurring capital, mostly in the form of own funds, which added 9 percentage points of solvency cover. Non-recurring items netted to a small positive amount, which includes a 0.1 billion positive contribution from economics net of hedging. Delivering a broadly neutral non-recurring component has been one of my key areas of focus since joining the group. As a result, we were able to retire 0.4 billion of debt while growing both our solvency surplus to 3.6 billion and our coverage ratio to 176%. Turning next to leverage, our ratio improved to 33%, reflecting the own fund's growth and the 0.4 billion of debt redemptions outlined in the previous slide. We remain firmly in control of our path to 30%, which will be managed within the upper half of our solvency operating range. With our capital emerging in a broadly even pattern through 2026, and with two debt instruments having June maturity or call dates, The in-year leverage and solvency ratio paths will not be linear. Moving to the IFRS results, our adjusted operating profit increased by 15% to $945 million. Profits from pensions and savings grew by 23% to $389 million, while those from retirement solutions increased by 19% to $563 million. These performance improvements were driven by business expansion, cost savings, and higher investment margins, reflecting the successful delivery of our growth, optimize, and enhance strategic initiatives. Turning next to cost savings, here we have accelerated delivery from faster progress on migrations and from leveraging technology to enhance our business and adopt a more efficient operating model. On a run rate basis, we have achieved 180 million of savings across 24 and 25, meaningfully ahead of our planned delivery profile. Savings on an earned basis were 110 million last year, up from the 28 million in 2024. The year-on-year benefit is therefore 82 million, with 55 million coming through our segmental results as operating margin improvements or reduced non-attributable expenses. The cost savings that relate to insurance contracts are driving meaningful increases in our CSM. This next slide completes the IFRS basis picture. As you can see in the dotted box, the improved operating profit performance means that we're now close to covering our recurring uses. The uncovered portion last year was only 29 million, significantly better than the 182 million in the previous year. The 2026 operating profit target of 1.1 billion will comfortably cover recurring uses, and by 2027 we expect to cover all uses, enabling us to grow our contribution to shareholders' equity before economic variances. Non-operating items include 264 million, reflecting the planned investment spent to deliver our strategic priorities. This is expected to normalize to below 100 million after the end of our current investment program. Adverse economic variances of 604 million were almost entirely driven by negative marks on equity hedges following a 19% blended rise in markets. As I have previously explained, this is a known consequence of our hedging strategy, which protects cash and solvency capital, but gives rise to an accounting mismatch volatility under IFRS. Specifically for 2025, the 604 million represents an accounting timing effect and is not an economic loss. This is because the negative equity hedge effects from the rising markets is booked in full through earnings, while the related positive effect from higher future fee revenues will come through earnings over time. You can clearly see these future benefits elsewhere in our financials, and I will come back to this on the next slide. Adjusted shareholders' equity, shown on the right, stood at 3.1 billion at the end of 2025. While this is still a partial picture, it remains the most relevant measure of a life insurance balance sheet under IFRS as it includes the future store of value of insurance contracts. I refer to it as a partial picture because it excludes the investment contract value in force which is recognised in our solvency capital. Let me now demonstrate where the offsets to the 604 million adverse economic variance are evident elsewhere in our financial results. The related benefits are captured within two stores of value, the first being the insurance contract CSM, and the second being the investment contracts value in force, which forms part of the Solvency II on funds. Both of these are significant in size with a combined value of almost 10 billion on a pre-tax discounted basis. Both have increased at a strong double-digit rate since 2023, driven firstly by our operational actions to drive flows, reduce costs, and improve risk-adjusted yields, but also from the equity market appreciation over this period. In 2025, positive market effects accounted for 0.1 billion of the increase in pre-tax CSM and for 0.5 billion of the increase in the value in force. These stores of value will come through earnings in future years and provide a strong underpin to our performance trajectory for many years to come. Turning briefly to dividend, where our approach remains unchanged, where a highly cash-generative business We operate a sustainable and progressive policy and have a strong track record of consistent dividend growth. The metrics that the board considers when undertaking the annual dividend assessment are repeated on the slide, being OCG, solvency coverage ratio, and parent company distributable reserves, which stood at 5.8 billion at N25. These metrics remain at very healthy levels. So to conclude, We have made significant progress last year in growing our operating cash and earnings metric and we have improved the quality of our balance sheet. This performance puts us firmly on track to deliver all of our 2026 targets. Our business is now tuned to generate sizable recurring excess cash which will enable us to complete our deleveraging this year and provide us with enhanced strategic and financial flexibility thereafter. Thank you for your attention. I will now hand you back to Andy.

So we're two years into a three-year strategy and while I'm encouraged by the progress we've made so far I'm focused on the year ahead and delivering on our promises for 2026. In Q4 we'll come back and talk to you about what next but the broad strategic direction will be in line with our current vision. When we started this strategic plan we set out a clear vision to be the UK's leading retirement savings and income business. We began building out the capabilities shown here to achieve this vision. The green ticks highlight areas where we've made material progress or are complete. We've streamlined our group structure, optimized asset management, completed the rollout of our full product suite. The light blue box at the top shows our next area of focus, as I outlined earlier, a digitally enabled and personalised customer interface focused on data, guidance and advice. This is more about building capability rather than material investment. We deliver this strategic vision by executing on our strategic priorities. So let's move on to what that means for 2026. Under Grow, we're further enhancing our technology and customer engagement capabilities. Our Salesforce CRM platform gives us a richer view of customer needs, enabling us to proactively nudge and support them at key life stages when decisions matter most. Targeted support will be a further unlock going forward as we engage more deeply with customers, supporting them in making the right decisions as they journey to retirement. We're focused on scaling our products and deepening our intermediary partnerships, widening our access to potential customers. While for workplace and annuities, it's about continuing to deliver excellent performance. For Optimize, we remain firmly on track for our leverage target, and we will bring more assets in-house, which increases certainty of delivering recurring management actions. Lastly, on Enhance, we'll complete our cost savings target, and we'll progress our migrations with only 25% of customers to be transitioned to their end-state platforms. We're also embedding technologies into our culture. We want AI to enhance the human skills, judgment and expertise that make us great. Let me finish by bringing this all together and reminding you why standard life is winning today and why we will continue to win. Across the top of the page, engaging with our customers combined with our capital and cost efficiencies uniquely positions us to win in this exciting market. Starting with customer engagement, we delivered over 15 billion pounds of net fund flows in workplace over the last three years. This was barely in positive territory when I started six years ago. Our group rebrand has brought our strongest brand to the fore. Walking around our offices last week, it's been really energising to see how enthusiastic colleagues are about the name change and what it means for us. With 12 million UK adults a customer of Standard Life Group, we are uniquely positioned to engage them about their futures. Looking ahead, we will proactively support far more of our customers, helping them and further turbocharging our growth. Moving to capital efficiency, this is particularly important in our capital utilising annuities business. The fact that we're more diversified than peers is a key driver of our lifetime IRRs of greater than 20%, which is attractive compared to those peers. These IRRs are supported by recurring management actions driven by the excellent asset management capability that we've built. Looking ahead, we will manage more assets in-house and we continue to explore strategic partnerships here. Thirdly, our cost efficiency continues to strengthen as we grow. This is particularly important in our capital light pensions and savings business. Our sector median margin expansion from 11 bits in 2023 to 19 bits in 2025 reflects the scale of our business and how we leverage technology. It compares favorably to our major peers who typically report single digit margins here. And looking ahead, we will utilize technology investments as we scale and drive operating leverage further. i'm very confident that we will continue to win given these competitive advantages which will drive our growing operating cash generation over the long term to summarize we operate in one of the most attractive retirement and savings markets in the world and our strengthening competitive advantages means we are well placed to benefit our strong execution is delivering better customer outcomes And all of this is translated into shareholder returns and provides attractive financial flexibility. So with that, we will move to questions. We'll start with questions in the room. We'll then move to questions online. If you have a question in the room, please raise your hand and wait for the microphone to state the organisation you're from. We'll do the questions in the room first and then online. Nick looks like he's staying sat here. You are actually coming up and joining me, Nick. You don't get away without that. See, the other thing, Vic also offered this time to chair the Q&A. No, why am I doing that? Because you ask all your questions. I decide the ones I like the sound of and then pass the rest to him, you see. So let's start with Thomas, yeah? And we'll go across from there.