Shares in Edinburgh-based investment, insurance and pensions giant Standard Life fell more than 3% on Tuesday afternoon despite the company reporting that its first-half operating profit rose 6% to 290 million pounds. Some analysts had expected a higher profit.

Standard Life suffered from a hit to its “spread/risk” business such as annuities in the six months to June 30 compared with the previous year.

Changes in the UK pension market have reduced the need for retired workers to buy a fixed-rate annuity.

Standard Life, one of Scotland’s biggest companies with a stock market value of almost 9 billion pounds, now stresses its focus on its “fee-based” businesses like its fund management arm and “drawdown” pensions.

Standard Life said its fee-based revenue rose 17% to £761 million.

The group’s assets under administration climbed about 2% from December last year to 302 billion pounds. Interim dividend rose 7.5% to 6.02p.

“Fee business continues to drive performance — 95 percent of our income is coming from fee-based propositions,” departing chief executive David Nish told reporters.

Keith Skeoch, chief executive of the group’s huge fund management division Standard Life Investments, succeeds Nish as group chief executive on Wednesday.

Skeoch’s promotion has led to speculation that the group would now seek to appoint a new boss at its fund management arm, which manages assets of about 250 billion pounds.

But Skeoch told reporters he would continue to run the fund management arm as well as the group “for the foreseeable future.”

Looking ahead, Standard Life said in a statement: “… we expect the full year contribution from annuity new business to reduce by between £10m-£15m and the contribution from asset liability management to reduce by between £30m-£40m compared to full year 2014.”

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