Mutual insurer Standard Life has rejected an all-share merger proposal from an unidentified suitor, it said yesterday, as it vowed to press ahead with the UK's biggest initial public offering for five years.

Europe's largest mutual insurer said it had received a number of approaches "in recent weeks", including requests to take a significant shareholding in the business, but had turned these down as well.

"We assessed the approaches and believe they do not offer value to our members. Indeed, they significantly undervalued Standard Life," chief executive Sandy Crombie said. He added that there were no ongoing contacts with the potential suitors, which he refused to name.

Standard Life, set to become the fifth largest UK-listed life insurer, has been seen as a possible takeover target even before its expected market debut in July.

The Edinburgh-based firm said it aimed to raise £1.1 billion (€1.6 billion) in its flotation, giving a potential market value of £4.8-£5.5 billion. This was based on a likely price range of 240-290 pence. The money raised will be used to expand its British business and support capital adequacy.

Three-quarters of voting members have to approve the demutualisation plan at a meeting on May 31st. In a pack sent out yesterday, Standard Life sought to woo policyholders with windfall payments and to calm fears that with-profit returns would be eroded with a listing.

Standard Life said half of its 2.4 million eligible policyholders stood to reap share payments worth more than £1,000 from the flotation, while the remainder would get £500-£1,000. About 94,000 customers in the Republic are in line for windfalls.

Standard Life said it swung to profit in 2005 and boosted new business earnings, helped by a strategic review, a shake-up of its product mix and a cost-cutting drive that began in 2004.

It posted a pretax profit of £152 million for 2005, against a loss of £340 million in 2004. - (Reuters)