Insurer plans £1.1 billion float

LONDON - Standard Life Assurance, Europe's largest customer-owned insurer, plans to raise £1.1 billion ($3.1 billion) in an initial public offering and disclosed it rejected a bid for the company because it was too low.

The share sale may value Standard Life at as much as £5.5 billion, the Edinburgh-based company said.

The company received approaches including an all-share merger proposal in recent weeks, and offers to buy stakes in the company, Standard Life said.

"Assets like Standard Life don't come about every day," said Youssef Ziai, an analyst at Williams de Broe in London. "They have sizeable market share in the UK and a number of players would be interested in the company."

Standard Life chief executive Sandy Crombie, said the approaches "undervalue" the company.

The rejection comes after Prudential, the UK's second-biggest insurer, dismissed a £16.9 billion offer last month from its larger British rival Aviva.

Standard Life has "no ongoing contact with effect to these approaches," said Crombie, who has cut thousands of jobs and reduced UK market share to focus on profit in preparation for the July IPO.

Companies including Aegon's Scottish Equitable unit in Edinburgh and Lloyds TSB's Scottish Widows unit could potentially gain cost savings from a merger with Standard Life, said Ziai. Prudential, Axa and Aviva may also be interested in Standard Life, said Ziai.

Standard Life's market value will probably surpass Friends Provident's £4.1 billion. The IPO will be the biggest by a UK insurer since Friends Provident raised £1.9 billion five years ago.

Standard Life needs the support of at least 75 per cent of its members to proceed with the plan. Executives at the Scottish insurer, including Crombie, in 2000 fought against a plan to go public at a time when customers might have reaped more than 10 times as much.

About half of Standard Life's members may get a payout of between £500 and £1000 each. Payment details have been sent to the insurer's 2.4 million customers, who will be able to vote on the proposal on May 31, the company said.

"I have a sense that our members appreciate the value of these proposals and will vote strongly in favour," said Crombie.

- BLOOMBERG