Standard Life policyholders likely to be disappointed

Standard Life's 2.3 million customers are mulling over their voting forms this week before the June 27th deadline for their decisions on demutualisation.

As the debate progresses, Standard Life has warned policyholders in the Republic that the majority of them will not receive major windfalls.

The assurance company says almost two-thirds of Irish policyholders would get a minimal payout, perhaps in the region of £250. This is because 40,000 of the 65,000 voting members hold policies which were taken out within the last two years at minimum price levels.

General manager for the Republic of Ireland, Mr Rory O'Riordan, says a further concern is the timescale involved in any demutualisation. Many policyholders are under the impression that any windfall would be paid immediately. "The reality is that demutualisation would take up to two years and [windfalls would] be in the form of shares and not cash," he said.

Standard Life believes demutualisation would decrease the company's competitiveness.

Compared to recently demutualised competitors - Norwich Union and Friends First - Standard Life claims it offered better returns to endowment customers whose policies matured this year.

The following results are based on endowment policies maturing in 2000 effected by a male age 30 next birthday for a premium of £50 (€63.5) per month.

A Standard Life 25-year policy returned £134,547 compared to £89,989 and £85,407 for Norwich Union and Friends First respectively. Similarly, 10-year policy returns were £11,160 in comparison with Norwich Union's £10,072 and Friends First's £9,972.

Results for other policies, such as with-profits, were not supplied by Standard Life in its statement.

Supporters of demutualisation disagree with the life company's stance and believe plcs must remain competitive to satisfy shareholders' and customers' demands.

Before making a final decision, customers should remember that the exact level of payout depends on their premium level, length of membership and the company's market value at the time of flotation.

For the demutualisation to succeed, 75 per cent of members will have to vote in favour.