Standard Life revealed today that it has cut more than 400 jobs at the same time as underlying profits soared by 71 per cent to £353 million during the first half of the year.

The UK's fifth-largest life and pensions provider said that it had cut its total headcount by 269 to 10,472 since the end of last year, and introduced 147 additional roles through investment in higher-margin products such self-invested personal pensions (SIPPs) and tailored insurance "wraps".

The cuts form part of plans unveiled in March to eliminate 1,000 roles as part of a strategy to save £180 million by the end of the year.

The Edinburgh-based insurer, one of the largest employers in Scotland, is also aiming to cut costs by £100 million a year by 2009.

Details of the job cuts came as Standard Life, which has built its profits turnaround on sales of more profitable savings and investment products, reported a 66 per cent increase in the profits contribution from new business to £151 million over the six months to the end of June. In particular sales SIPPs help bolster the insurer's profits.

Analysts had been expecting profits based on embedded value to rise 59 per cent to about £327 million, with new business profits predicted to jump 50 per cent.

"We have made significant progress in increasing margin in our UK business over the first half of 2007, thanks to strong growth in higher margin products supported by the continued improvement in underlying efficiency," said Sandy Crombie, chief executive at Standard Life.

The soaring profits — and a 5.6 per cent increase in the interim dividend to 3.8p — underscore Standard Life's dramatic growth since it was demutualised and listed on the London Stock Exchange last June.

Earlier this year, Mr Crombie put Trevor Matthews, his former head of life and pensions, in charge of a newly created UK Financial Services division, housing Standard Life's bank and its healthcare insurance unit.

Mr Crombie also works closely with David Nish, group finance director. Both Mr Matthews and Mr Nish have been tipped as potential replacements when Mr Crombie decides to leave, in February 2009 at the earliest.

Standard Life's shares rose 3.25p to 307.25p against a falling wider market.

Times Recommends

• Food prices rise 8.3% on soaring fish and meat
• Car sales crash as economy hits skids
• House prices fall but Bank leaves rates on hold