LIFE assurer Standard Life is considering a stock market flotation in what could be the biggest shake-up in its 178-year history.

The society, based in Edinburgh, has been locked in discussions with the City watchdog over its balance sheet, and said it had launched a strategic review looking at the options for changing its structure.

If the society was to float, the process would take up to two years, and could potentially trigger thousands of pounds in windfall payments for its 2.6 million with-profits policyholders.

It would also represent an about-turn for the company, which had previously rejected calls by policyholders to demutualise.

The review has been prompted by the introduction of a new accounting regime by the Financial Services Authority.