Teacher pushes for new Standard Life demutualisation vote

Standard Life, Europe's largest mutual insurer, is facing a mutiny of its members to convert it in to a public company.

David Stonebanks, a retired electrical engineering teacher from Stevenage, has been quietly building support for a new demutualisation campaign in the past few months and now has the support he needs from members to call an extraordinary meeting of the company.

Mr Stonebanks has had pledges of support from 1,600 of Standard's 2.3 million members via his dedicated demutualisation website, and expects to have up to 2,500 on board by the time he is able to put a motion to the company. He must bide his time until July, when the three-year time restriction between demtualisation bids runs out. Standard fought off a demutualisation campaign in 2000, led by the Monaco-based fund manager Fred Woollard.

Policyholders expecting bonanza windfalls, however, are likely to be disappointed. The value of the company has plummeted in the past three years, after heavy investment in equity markets throughout the bear market ravaged its spare funds. It had £11bn of surplus capital in 2000 that would have been available for distribution between policyholders. Standard now has only £700m over its solvency margin, and has had to use £1.5bn of future profits and £1bn of debt to stay above water with the regulator. Listing on the stock exchange would allow Standard the opportunity to raise more capital for the business. Policyholders are likely to only receive shares in the company if it were to demutualise.

"Support for the campaign has snowballed in the past few weeks," Mr Stonebanks said. "The crock of gold is not as big as it once was, but there is still some value there for policyholders." He plans to canvass support for his campaign at the company's annual general meeting on Tuesday next week.

Standard, which met with Mr Stonebanks at the end of March to discuss his campaign, maintains that mutuality remains in the best interests of members.

It was thought that when Scott Bell, the chief executive in 2000 and stalwart of its mutual status, retired last year the firm would become more open to ending its mutual status. It has been member-owned since 1925.

Standard cut policyholder payouts by an average 15 per cent last year. It has also said that most of its 1 million endowment customers, whose policies were designed to repay their mortgages, face a potential shortfall. Standard's directors, however, received bonuses totalling nearly £2m for 2002 and are expected to come under fire from policyholders in Edinburgh on Tuesday.