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US credit crunch so far having no effect on British savers; INSURANCE.

The stock market shake-out caused by the "credit crunch" arising for the US sub-prime mortgage crisis, has so far had little or no effect on the behaviour of British long-term savers.

That is the experience of Standard Life, which yesterday reported a 71 per cent jump in its half-time operating profit to pounds 353 million.

Standard Life is still suffering from an exodus of with-profit policyholders, but these are mainly individuals who had held on to receive shares when the Scottish life company shed its mutual ownership and came to the stock market in July last year.

"We have virtually no significant exposure to the direct problems in the markets and are seeing almost no impact in terms of what our customers are doing," said Sandy Crombie, chief executive.

He said a 3.8p interim dividend declared yesterday was 5.6 per cent higher than what shareholders would have received last year if Standard Life had been listed. After a hesitant start, the shares recovered to finish a quarter of a penny ahead at 304.25p.

New business contributed pounds 151 million towards the profit, a 66 per cent increase, again above expectations.

Margins rose to 1.8 per cent across the board, and to 1.9 per cent in the UK alone.

Standard Life attributed this improvement to better capital efficiency and a shift to more lucrative products including self-invested personal pensions (SIPPs), which enable savers to make their own investment decisions, but carry higher fees.

Remaining weak spots included the European and Canadian operations and Standard Life Bank, where profit fell by 18 per cent.

Commenting on the number of policyholders still cashing in their policies early, David Nish, finance director, said: "It has been slightly worse than we had expected. Lapses in the first half have been above our long-term assumptions."

But it was still too soon to estimate the lapse trends for the remainder of the year, he added.

Standard Life said it was on target to deliver cost cuts announced in March, reducing its headcount by 269 people.

Fallout from the US housing slump on mortgage and real estate companies deepened yesterday as title insurer First American Corp and subprime lender NovaStar Financial announced job cuts and NovaStar's auditor expressed doubt that the company will survive.

First American, the largest US provider of insurance to protect homeowners against property claims, said it would cut 1,300 jobs, on top of 600 announced in the second quarter, citing "rapidly changing conditions".

Nevill Boyd Maunsell, Page 19
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Sep 5, 2007
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