Bloodletting put the Life back into Standard

The slogan "I like Standard Life" was trumpeted in the insurer's recent advertising campaign.

Few of its investors, or analysts in the City of London, are likely to have expressed such an opinion of late. Since the company ditched its mutual status nearly two years ago, its share price has scaled to 350p, only to fall back to less than 200p after a failed bid to buy Resolution, the closed life "zombie" funds group. Standard's shares now hover just above their initial list price of 230p.

"Resolution was an immensely complex deal," says Standard's chief executive, Sandy Crombie, as we meet in his office with its fabulous view of Edinburgh Castle. "But would I do it again? Yes, I would. Had we been able to do it in private, I'm sure things would have been different. We never got a chance to talk our game because we were put under panel restrictions from the off. It allowed the scepticism to build up."

Crombie was eventually outmanoeuvred by Hugh Osmond, the man who founded the Pizza Express chain and is now the combative boss of Pearl Assurance. He refuses to be drawn on Osmond's tactics, although he smiles wryly at talk of the protracted buying process that saw Pearl finally conclude the Resolution deal.

"There's no way Crombie would have played the game Osmond's way," says one Standard Life insider. "Osmond got Resolution but there must have been a sense of relief in Edinburgh when the post-deal mess unfolded."

Crombie is a Standard Lifer through and through, having earned his stripes during more than 40 years of service. Failure to capture Resolution, which resulted in the Takeover Panel rapping Standard over the knuckles for its handling of the bid attempt, clearly still irks the softly spoken Crombie. But he pulls back at apportioning blame to his advisers at the time, UBS and Merrill Lynch.

"The deal ticked the four criteria we look for in an acquisition," he says. "Any one of them on their own would have been interesting – but all four. Cynicism grew because people thought we were running out of cash but our March results show that this isn't an issue."

Nevertheless, cash, or a lack of it, has been the issue that Crombie has had to grapple with since he took over the reins in 2004. At the behest of the financial regulator, which was worried about Standard's capital position, his first serious act as chief executive was to sell off £7.5bn worth of equities at the bottom of the market and swap them into expensive bonds.

"We were using capital up at a rate of knots," he says. "We needed to generate rather than consume cash through paying commissions to acquire new business. We had to find products and routes to markets that didn't involve paying out large amounts of cash. I think our move away from commissions will look four or five years ahead of its time when people look back."

Much of the credit for the move away from paying commissions to financial advisers has gone to Trevor Matthews, the Australian former head of life and pensions at Standard Life, who has since quit to run what's left of its emasculated rival Friends Provident.

However, Crombie, who is thought to have had a difficult relationship with Matthews, disagrees: "No, the decision was made in early 2004 before Trevor came on board in July," he says. "The direction had been set but it was vital that the implementation didn't damage the organisation, which was subject to so much change."

Change at Standard also came in the form of more than 5,000 redundancies, a tough move for any chief executive, let alone someone so much a part of the fabric of the company.

"If someone had been parachuted in, they wouldn't have understood what would be tolerated," says Crombie, who went without his half a million pound bonus when the axe was first wielded. "Not liked, but tolerated."

He revels in his image as "a fixer", having "sorted out" Standard Life Investments and presided over a badly needed revamping of the company's once-dying life and pensions arm.

But after brushes with the tabloid press – infamously, he took ownership of a new Porsche just as job cuts were being announced – he is wary of the media.

"Look, I'm not someone who especially enjoys the spotlight," he says. "I'm not that type of person. But we had some owning up to do. Mistakes were made."

He now claims the insurer has a "stable and successful" base from which to grow: "We don't need to shrink further. We have a good, healthy body – it's been put on a diet and fitness regime. There's certainly no need for any aggressive surgery."

As the scalpel is back in the surgical kit, it would seem that Standard's healthcare business and its bank, two operations that many analysts believe have dragged badly on its share price, won't be amputated any time soon.

"You have to accept that [with the bank] there is going to be some short-term pain," says Crombie. "It's something everyone is feeling at the moment."

Neither is he likely to be leading an international expansion. He might talk about Standard being "global" but its roots will remain firmly in the UK.

"Global doesn't mean you've got to be everywhere – it's a mindset," he says. "You need to beat them in your own backyard first, then take them on elsewhere afterwards."

Four turbulent years at the helm of Standard Life have left him with grey (albeit lustrous) hair, prompting the question – one he was once asked nearly 10 times in a row by a reporter at a press conference – "Any plans to step down?"

"I've been fielding questions about succession planning since the day I was appointed chief executive," he says, a little wearily. "I'm fit, healthy and I've never been more motivated."