A move towards service-oriented architecture (SOA) and a strategy to develop a single IT platform have helped insurance group Standard Life cut business costs and increase its profits by 43 percent over last year.
The group reported this week that its European Embedded Value (EEV) operating profit before tax had risen to £881 million. Standard Life said in its 2007 preliminary results that the increase is due to a "continued shift towards improved new business cost-efficiencies".
New business cost-efficiencies and a new range of products dubbed 'capital lite' have seen new business increase by a margin of 2.1 percent.
Standard Life has three cost-efficiency targets: a reduction in group corporate centre costs; a reduction of UK life and pension expenses; and a "continuous improvement programme". In 2007, these delivered combined savings of £90 million.
And the twin drives towards service-oriented architecture (SOA) and a single IT platform have been at the heart of cost reductions.
Standard Life says SOA has saved it £16 million in the three years the framework has been in place. The single IT platform strategy aims to reduce costs by £100 million by 2009. This will be achieved through shared services.
Last autumn, Standard Life completed the migration of small and medium sized business policy administration to the single platform successfully. It has also moved the acquired FirstAssist organisation over to the single IT platform, which is expected to be complete by the third quarter of 2009.
Financial analysts were predicting that Standard Life results would be poor and were surprised by today's figures. Last year the Edinburgh based insurance provider failed to acquire rival Resolution and lost the head of its UK retail arm to Friends Provident. Standard Life demutualised in a flotation in 2006.
Group chief executive Sandy Crombie commented, "Standard Life has delivered a very strong set of results in its first full year as a listed company. Our distinctive 'capital lite' approach to designing and distribution products has allowed us to more than double the capital and cash generated in the business."