INSURER Standard Life is poised to give up its mutual status in a move that would end 80 years of service to stakeholders.

The move is likely to be part of an overhaul that may lead to 1,000 job losses.

Standard wants to reduce costs by about 20 per cent to improve the profitability of its UK life and pensions business.

The cuts, mainly affecting the group's Edinburgh office, are part of a review that Standard said was likely to lead to demutualisation.

With-profits policyholders will receive a windfall payment of between £2,400 and £3,000 following stock market flotation or sale - expected in 2006.

Standard Life, which was founded in 1821 and became a mutual in 1925, has struggled to compete in recent times and has been under pressure from some stakeholders to give up its mutual status.

The review came in the wake of new solvency rules introduced by the Financial Services Authority (FSA).

Under the regulations, the FSA requires insurers' assets and liabilities to be calculated on a more realistic basis, leading to Standard Life needing to increase its level of reserves in order to write new business.

The society said its "realistic" balance sheet still showed a surplus of £4.6bn - more than twice its risk capital margin.

However, it said the decline in with-profits business had resulted in a smaller proportion of individuals bearing a larger part of the company's risks. With-profits represents 20 per cent of new business sales compared with 40 per cent two years ago.

Sandy Crombie, chief executive, said: "While being a mutual has been a key part of Standard Life's success in the past, we now believe that raising further capital by way of demutualisation is likely to be in the best interests of the company and its policyholders."