To float or not to float, that is the question

The new rules of the Financial Services Authority may mean that Edinburgh based Standard Life Assurance may have to give up its mutual status and float on the stock market. I may well write more about this in the future but couldn't help noticing this quote from Standard's boss:

"If we become a public company, future payouts will go down by 10 per cent because we will have to pay dividends … The best way to understand our worth as a mutual is to realise we are worth 10 per cent more." - Iain Lumsden, 12 December

That's extremely misleading. At present, all of the wealth owned by Standard Life is attributable to its current members - the policyholders. If Standard Life floats on the stock market dividends will indeed be payable to the shareholders but the first shareholders will be those very same members. No one can force them to sell their investment if they think that the capital value of the shares plus future dividends is worth more than the going stock market valuation.