Wrap round-up: three platforms make a combined loss of over £54m in 2008

A £9 million plunge into the red for the UK’s largest platform Skandia will send shivers down the back of life company executives waiting for their wraps to stand on their own two feet.  

Wrap and platforms have a long road to profitability now that only Transact and Cofunds are in this club and the losses reported by three well-established players, Skandia, Standard Life and Ascentric show there are challenges facing new and old wrap providers.

The annual accounts for all three reveal loans from parents confirming financial backing, which is vital for wraps and platforms. 

Skandia Investment Solutions 

The largest platform provider Skandia blamed a £9 million dip into the red on development costs.  

The platform’s parent company, Skandia MultiFunds Ltd, which now holds £26.5 billion of assets made a £9 million loss for the year ending 31 December 2008 after making a £3.7 million pre-tax profit in 2007.  

Skandia blamed the loss on the ‘significant’ investment needed in its recently rebranded Skandia Investment Solutions platform, which merges parts of Skandia MultiFunds and Selestia. 

Skandia MultiFunds Ltd bought Selestia for £21.5 million from its own parent – South African insurer Old Mutual –in February 2008. The Skandia director’s report notes the integration of Selestia and MultiFunds was a key risk for the business. 

The platform’s income has remained resilient, climbing to £98.8 million from £94.3 million in 2007, despite the battering that markets took over the year. The Skandia platform also has a long-standing, £9 million loan from Skandia Life Assurance to help shore up its capital position.

The Financial Services Authority approved the loan and re-repayment is conditional on its approval.