Sales have fallen at Standard Life

The cuts have been made against a backdrop of falling sales for Standard Life, the mutually-owned Edinburgh-based insurer.

Bonuses paid to policyholders are to fall by 6% on maturity or retirement.

The move is the latest in a long line of cuts made by the insurer, which recently fought off moves to force a demutualisation vote.

However, there was a glimmer of good news as the insurer revealed that its financial position had improved of late.

Sales fall

Rocked by criticism over its investment strategy, Standard Life has seen sales fall by 25%.

In response, in a bid to save an estimated �11m a year the insurer has cut 200 jobs.

It is moving support for its operations that handle new business into six customer service centres, which it said would give more flexibility.

Unlike many of its rivals, the insurer has remained doggedly invested in shares at a time when stock markets have been in freefall.

We are confident that the worst is over for the stockmarket and our investment strategy will deliver long-term benefits to policyholders Simon Douglas, Standard Life

However, an improvement in the fortunes of the stock market since the outbreak of war in Iraq has helped the insurer move to a surer financial footing.

Assets under management at its fund unit rose by �3.3bn in the first half of 2003 to �86.6bn.

Investor woe

Nevertheless, Standard Life announced a cut in final bonus rates for its 2.1 million with-profits policyholders in the UK.

This is not the first-time that Standard Life customers have had to endure cuts in the value of their policies.

Twice in the last 12 months the insurer has cut bonus payouts and last September Standard Life, for the first time in its history, imposed hefty exit penalties for pension and endowment investors.

When asked by BBC News Online how Standard Life could justify cutting payouts at a time when it was benefiting from an upturn in the stockmarket, Simon Douglas, spokesman for the mutual insurer, said:

"Investors have actually seen the value of their policies increase in the last six months. We are confident that the worst is over for the stockmarket and our investment strategy will deliver long-term benefits to policyholders."