Standard Life 2025 results: cash up, profits higher, dividend nudged again
Standard Life plc has posted a solid 2025, ticking the boxes on cash, profit and capital while edging the dividend up 2.6%. Operating Cash Generation, the group’s preferred measure of underlying cash generation, rose 5% to £1,474m. IFRS adjusted operating profit was up 15% to £945m, and the Solvency II balance sheet strengthened again with a 176% Shareholder Capital Coverage Ratio.
There is a statutory IFRS loss after tax of £394m, but management is clear this mainly reflects hedge accounting noise rather than economic weakness. Deleveraging continued and the group says it is on track to meet all its 2026 financial targets.
Headline numbers investors care about
| Metric | FY 2025 | FY 2024 | Change |
|---|---|---|---|
| Operating Cash Generation | £1,474m | £1,403m | +5% |
| Total cash generation | £1,711m | £1,779m | -4% |
| IFRS adjusted operating profit | £945m | £825m | +15% |
| IFRS loss after tax | £(394)m | £(1,078)m | +63% |
| Shareholder Capital Coverage Ratio | 176% | 172% | +4%pts |
| Solvency II surplus | £3.6bn | £3.5bn | +2% |
| Solvency II leverage ratio | 33% | 36% | -3%pts |
| Assets under administration | £317bn | £292bn | +8% |
| Total dividend per share | 55.40p | 54.00p | +2.6% |
What powered the performance in 2025
Workplace and Retail pensions built scale and margin
Pensions and Savings, the capital light fee business, is doing the heavy lifting. IFRS adjusted operating profit rose 23% to £389m, helped by 7% growth in average assets under administration to £204.6bn and a 2 basis point margin improvement to 19bps. Basis points, or bps, are one hundredths of a percent.
- Operating Cash Generation for Pensions and Savings grew 13% to £396m.
- Workplace net inflows held steady at £5.3bn on £10.0bn of gross inflows and 247k new members, taking total Workplace customers to 3 million.
- Retail net outflows improved to £7.8bn from £8.6bn, with management calling these green shoots as new propositions and digital engagement ramp up.
Annuities delivered resilient cash despite selective new business
Retirement Solutions, which includes individual annuities and Pension Risk Transfer (PRT), produced 3% OCG growth to £879m with a spread margin of 219bps. The spread margin is the net return the annuity book earns on assets over what it credits to liabilities.
- Individual annuity premiums were £1.2bn, up from £1.0bn, taking market share to 15%.
- PRT volumes were £3.9bn, down from £5.1bn, but included a record £1.9bn deal. Management emphasised discipline, with total annuity capital strain trimmed to £162m and lifetime IRRs of more than 20% in PRT.
- The Contractual Service Margin (CSM) – a store of future IFRS profit under the insurance accounting rules – grew 17% to £3,806m (gross of tax).
Cash, capital and dividends: why this matters to shareholders
Standard Life generated £1.0bn of free cash flow in 2025, covering the £548m dividend and leaving £423m of excess cash. The group expects about £500m of excess cash in 2026, its final year prioritising deleveraging. The Solvency II leverage ratio improved to 33% and the target is around 30% by end 2026.
The dividend story remains steady. The Board recommends a Final dividend of 28.05p per share, taking the 2025 Total dividend to 55.40p. Distributable reserves at the holding company were £5,800m at year end. Key dates: the shares go ex-dividend on 9 April 2026, record date is 10 April 2026, and payment is expected on 20 May 2026.
Strategy execution scorecard and 2026 targets
- Cost savings: cumulative run-rate savings reached £180m across 2024-25, versus a £250m end-2026 target. 75% of policies now sit on end-state technology.
- Recurring management actions: £560m in 2025, up from £537m. These are repeatable balance sheet and asset optimisation moves that top up cash generation.
- Market positioning: top 3 in Workplace with £10.0bn gross inflows, ambition to move Retail from top 10 to top 5, and maintain a top 5 position in annuities.
Management says the group is firmly on track to deliver all 2026 financial targets: mid single digit OCG growth per annum, c.£1.1bn IFRS adjusted operating profit, SCCR within 140-180% and leverage around 30%.
The messy bit: IFRS loss and equity dip explained
The statutory IFRS loss after tax of £394m and the drop in IFRS shareholders’ equity to £244m look alarming on their own. The driver is economic variances from the Solvency II hedging programme being reflected in IFRS, where parts of the solvency balance sheet are not recognised. In plain English: the hedges are there to protect cash and capital, which are both healthy, but they can make IFRS volatile. Management is comfortable accepting this accounting noise to prioritise dividends and solvency stability.
What could worry investors
- Retail is still in net outflow at £7.8bn, even if the trend is improving. Retention will be a key watch item as digital tools and the new advice proposition scale.
- PRT competition remains intense. 2025 volumes were lower by choice and 2026 is expected to stay competitive, with c.£1.6bn of transactions completed or at exclusive stage year to date.
- Non-operating cash outflows rose to £533m, including investment in transformation and collateral on currency hedges. These should moderate after the current programme completes.
- Leverage at 33% is moving the right way, but there is still work to hit c.30% by the end of 2026.
My take: a cleaner, cashier Standard Life taking shape
There is plenty to like here. Cash generation is growing, dividends are creeping up, capital is robust and leverage is falling. The fee business is widening margins and the annuity engine continues to throw off cash while staying disciplined on new business. The 17% jump in CSM also underpins future reported profit.
The bear points are well signposted: IFRS volatility, retail outflows and a hot PRT market. None are new, and the first is arguably a feature rather than a bug given the stated preference for Solvency II stability. If the group lands its 2026 targets and completes deleveraging, post-2026 capital deployment could become more interesting for shareholders.
Jargon buster
- Operating Cash Generation (OCG) – management’s measure of sustainable cash remitted from the life companies to the group.
- Shareholder Capital Coverage Ratio (SCCR) – Solvency II Own Funds divided by Solvency Capital Requirement for the shareholder view. Higher is stronger.
- Contractual Service Margin (CSM) – the unearned profit on in-force insurance contracts that releases into IFRS operating profit over time.
- Pension Risk Transfer (PRT) – insurers take on defined benefit pension liabilities in exchange for a premium, typically via buy-ins or buy-outs.
What to watch next
- Delivery of c.£500m excess cash in 2026 and the path to c.30% leverage by year end.
- Retail retention and flows as the advice proposition and digital engagement scale.
- Annuities deployment discipline with an up to c.£200m capital spend target in 2026 and the £1.6bn PRT pipeline already completed or in exclusivity.
- Progress on run-rate cost savings to the £250m target and completion of policy migrations.
- Q4 2026 update on the post-2026 plan. Management also aims for IFRS shareholders’ equity to grow in 2027, excluding economics.
Overall, this is another confident step forward. If Standard Life keeps compounding cash and trimming debt, the optionality for higher shareholder returns after 2026 looks better by the quarter.
