The planned flotation of Standard Life in the UK could be postponed from next year until 2007 unless Europe's biggest mutual life assurer resolves outstanding issues with the UK's financial services authority (FSA) by the end of this month.
The news will come as a blow to the group's Irish members, who are in line for a windfall.
The Edinburgh-based group is locked in negotiations with the regulator over assurances the mutual gave last year, when it announced it was unable to fulfil its mortgage promise to 600,000 holders of endowment policies.
The mutual also set a deadline for considering mis-selling complaints over endowment policies, which for most of the 350,000 potentially affected customers is next May.
Standard Life said last October it had set aside £393 million (€572 million) to pay top ups to policyholders facing shortfalls, but customers whose endowment policies mature after the end of this year will receive only 40 to 60 per cent of the top ups they had been counting on.
The regulator will want to be reassured on the position of these policyholders before the mutual finalises its flotation proposals, including allocation of capital and how much new money to raise from institutional investors.
The issue is sensitive because a clash with the regulator last year over the measurement of its solvency forced Standard Life to change its chief executive, reverse its long-standing opposition to demutualisation and sell £7.5 billion of equities.
The regulator would not comment on the talks, but the mutual appears confident that it will be able to press ahead with the float, which has been pencilled in for next summer.
Nigel Dunne, a spokesman for Standard Life in Ireland, said he was not aware of any delay in the plans to demutualise the company and that it was on track to float next summer as planned.
Almost 100,000 of the group's 130,000 Irish members are in line for a payout when the Edinburgh-based group floats. Holders of mortgage protection or small savings products are not eligible for any windfall.
The mutual's board hopes to give the go-ahead this month. However, Standard Life is on a tight timetable to obtain approval of its flotation from 2.4 million with-profits policyholders.
Even if the demutualisation proceeds on time, it is likely to be April before policyholders learn the likely value of their windfalls, which will be available in shares or as cash. A minimum windfall worth up to £500 is expected.
