[September 26, 2006]

U.K.'s Standard Life Confirms Departure of Finance Director

(BestWire Services Via Thomson Dialog NewsEdge)
U.K. life insurer Standard Life plc has confirmed that Alison Reed, its finance director, is to leave her post.

The announcement, which had been pre-empted by extensive coverage in the British financial press, came less than three months after the group underwent a demutualization and initial public offering.

In confirming Reed's Oct. 31 departure, Standard Life said she had "decided to step down following the successful demutualization and IPO of the company."

Standard Life, which said it had begun to look for a new finance director, offered no reasons for Reed's departure.

"Alison, with her FTSE100 experience, played an invaluable role in delivering the successful IPO," Standard Life said in a statement. "The board thanks her for her enormous contribution during her 15 months tenure as group finance director."

The demutualization and IPO resulted in a market capitalization of 4.9 billion pounds ($9.01 billion) and inclusion among the 100 largest U.K. listed companies (BestWire, July 10, 2006).

Standard Life (LSE:SL), which is based in Edinburgh, Scotland, is due to release its interim results Sept. 28.

Reed's departure also is likely to illustrate the difficulty of filling such high-level posts in the U.K. insurance sector.

Reed was hired in April 2005 as the group was gearing up for the demutualization. She had been forced out of her previous job as finance director at U.K. retail chain Marks & Spencer.

Reed had earned a reputation among analysts as being lacking in insurance knowledge. This stood out, since senior U.K. insurance executives normally are recruited from within the financial services environment.

Speaking before Standard Life confirmed Reed's planned departure, Roman Cizdyn, an insurance industry analyst at Oriel Securities in London, said of Reed: "The specialist analysts found her knowledge and abilities quite wanting."

Cizdyn recalled that Standard Life had conducted a lengthy search before hiring Reed and suggested the group had not found what it wanted. "Virtually her entire career was in retail," he said.

Mikir Shah, an insurance analyst at Fox-Pitt, Kelton in London, also pointed to Reed's lack of an insurance background. Shah also spoke before Standard Life confirmed Reed's planned departure.

"She came in from retail," Shah said in a telephone interview. "Obviously, the transition to insurance is going to be difficult, given the financial complexities around life insurance in particular. She was always going to be on a steep learning curve."

The opening at Standard Life offers another reason for insurance finance directors to dust off their resumes. Life insurer Friends Provident plc also is looking for a finance director.

The Standard Life job might appeal to the holder of a similar position at a smaller organization or the deputy finance director of a large company.

Asked to describe the ideal candidate, Shah said, "You'd want somebody who understands insurance and has the respect of the City [financial community] at the same time."

A search could take as long as six months, Shah said. "It's a question of making sure that the slot is filled relatively quickly and with the appropriate person," he said.

One problem, Cizdyn suggested, is a shortage of potential candidates with experience in organizations within the FTSE 100, or the Financial Times Stock Exchange index of the 100 largest U.K. listed companies.

"There is a big divide between FTSE and the rest," Cizdyn said.

Standard Life's stock was trading at 271.25 pence a share on the afternoon of Sept. 26, up 0.84% from the previous close.

(By Robert O'Connor, London editor)

Copyright 2006 A.M. Best Company, Inc.

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