The company said it had taken the decision, which is subject to regulatory approvals, “following changes in the regulatory landscape and resulting environment”. It added that it will be contacting all customers with an in-force savings and investment plan to offer them a closure value – this will include an 8% enhancement which will be paid into their plan.
It is understood the closure will result in the redundancy of nine positions, including Middle East chief executive, a role currently filled by Chris Divito who has managed the office since it was opened in 2012.
Speaking to International Adviser, Alan Armitage, chief executive for Asia and emerging markets at Standard Life, said the decision follows a “hardening stance from the Insurance Authority (IA) over the course of this year”, which has seen the regulator spell out exactly who licensed insurance entities can and can’t do business with.
“Prior to this year, it was never really spelled out in precise terms,” said Armitage. “It was previously, that while IA licensed firms couldn’t deal with non-IA entities for insuring risk – life insurance basically – they could deal with them for investment contract purposes – as we were offering.
“The position hasn’t changed, but specific guidance was given to companies – i.e. the brokers were told they should only be dealing with providers which were IA licensed.”
Pressure
The pressure put onto brokers by the Insurance Authority came to a head earlier this year when Holborn Assets, one of the largest insurance brokerages in the UAE, announced it was no longer going to accept business from non-IA licensed firms. This included Standard Life International, but also Skandia International, RL360° and Hansard International.
There had been some speculation that Standard Life may decide to re-open the office as a Standard Life Investments entity, however, Armitage said there are no plans in place to do this. The CEO also said there are no current plans to open any other operations elsewhere in the Gulf or wider Middle East.
ILAS products withdrawn
At the beginning of last month, Standard Life also revealed it had withdrawn both its investment linked assurance scheme products, Harvest Elite Investment Plan and Harvest Wealth Investment Plan, from Hong Kong in preparation for a ban on indemnity commission due to be enforced from January 2015.
Asked whether, given recent developments in both the UAE and Hong Kong, there were concerns about the international side of Standard Life’s business, Armitage said recent results show the strength of the business and that, while regulatory change will have an impact, these markets are moving in the right direction.
“Looking specifically at Hong Kong, we feel it is moving in a direction that we are supportive of,” he said.
“Anything that supports customers we have been advocates of. In Hong Kong we started doing things individually as a company to prepare for this new landscape months ago – ensuring we only deal with quality distributors, have quality clients and take quality business and we’ve, enhanced our underwriting too. We are focused on the quality of the customer, not top line growth.”
He added that the company’s experience in the UK makes Standard Life “pretty confident it will continue to develop under these new rules”.
Armitage also revealed it has already submitted new indemnity commission-free products to the Securities and Futures Commission and Office of the Commissioner for Insurance in Hong Kong for approval.
