Standard Life share price

The insurer said it had faced "difficult market conditions" in the second half of the year.

From October to December it achieved �2.92bn of UK life and pensions sales, which was worse than expected and 20% down on the same period of 2006.

Standard Life also confirmed that its UK boss Trevor Matthews had resigned.

Mr Matthews, one of its most respected executives, is leaving to be the new chief executive of rival Friends Provident.

Standard Life shares fell 3.4% in early trading.

The insurer has also announced that it is going to make additional provisions to cover the cost of customers cashing in their policies early.

"We have seen that lapse rates, particularly for the older products, have continued above long-term assumptions, so we will be making additional provisions at the year-end," said finance director David Nish.

"The important thing is we will reach our financial targets for this year, notwithstanding the size of any additional charge we make."