LONDON (Reuters) - Insurer and asset manager Standard Life SL.L posted a forecast-beating 9 percent rise in 2016 operating profit, helped by building up a broader geographic spread of clients, it said on Friday.
The Edinburgh-based company has been shifting focus to the asset management sector and away from life insurance. It has stopped writing annuities -- pensions that pay a fixed income for life, though it has a large business managing workplace pensions.
Standard Life’s strong performance came in spite of worries about the Chinese economy early last year and broad outflows from funds in the aftermath of Britain’s vote to leave the European Union, Chief Executive Keith Skeoch told a media call.
“Our targeted investments and diversification helped increase our assets,” he said.
Assets under administration rose 16 percent to 357 billion pounds, above a forecast 335.4 billion.
However, fund arm Standard Life Investments’ flagship GARS multi-asset strategy saw 4.3 billion pounds in net outflows.
“Going into 2017, we expect the outflows from GARS to remain elevated,” Barclays analysts said in a note, reiterating their negative recommendation on the stock.
The company set aside 175 million pounds in provisions for compensation following the Financial Conduct Authority’s review of annuity sales last year.
Standard Life's shares were down 0.3 percent at 374 pence at 0911 GMT, compared with a 0.21 percent fall in the FTSE 100 index .FTSE.
More merger activity is expected in asset management, after London-based asset manager Henderson Group HGGH.L agreed to buy U.S. rival Janus Capital Group Inc JNS.N last year in an all-share $6 billion deal.
“We have long-term ambitions...we are continually scanning the horizon to see what’s available,” Skeoch said of M&A, without giving more detail.
Skeoch said contingency plans following the Brexit vote could mean Standard Life Investments adding “tens” of staff in Frankfurt or Luxembourg to bolster management of its funds.
Operating profit before tax was 723 million pounds ($907.4 million), compared with 684 million pounds seen in a company-supplied consensus forecast.
Standard Life said it would pay a final dividend of 13.35 pence per share and full-year dividend of 19.82 pence, a rise of 8 percent from a year earlier.
Skeoch was paid 2.75 million pounds in 2016, following pay of 3.46 million in 2015, according to Standard Life’s annual report, published on Friday.
Reporting by Carolyn Cohn; Editing by Rachel Armstrong