Rothesay Life confirms purchase of £12bn annuity portfolio from Prudential

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UK-based Rothesay Life announced today that it has entered into an agreement to purchase £12bn of annuities from Prudential plc.

Rothesay Life is one of Britain’s leading life insurers specialising in providing de-risking solutions to UK-defined benefit pension schemes and insurance companies.

News of the purchase coincided with Prudential’s surprise announcement of a demerger of M&G Prudential and Prudential plc, resulting in the creation of two separate listed companies.

The Rothesay Life transaction has been structured initially as a reinsurance contract and is expected to lead to a Part VII transfer of the underlying assets and policy liabilities to Rothesay Life subject to regulatory
and court approval. Rothesay Life’s shareholders have invested additional equity to finance the transaction.

The transaction will result in a significant increase to Rothesay Life’s asset base to over £37bn. Following completion, Rothesay Life will be the largest specialist annuity insurer in the UK, covering 400,000 policyholders.

This is Rothesay Life’s third reinsurance transaction of in-force annuities.

Established in 2007, Rothesay has been insuring defined benefit pensions and annuities for over a decade and with this transaction will be paying over £2bn each year to over 750,000 policyholders including from Scottish Equitable and Zurich Assurance as well as pension schemes such as British Airways, the Post Office, General
Motors and Philips.

Prudential policyholders will continue to be serviced by Prudential until the effective date of a Part VII Transfer. Thereafter, they will continue to receive their benefits in the normal way from Rothesay Life. Policyholders do not need to take any action.

Addy Loudiadis, CEO of Rothesay Life, said: “I am delighted that Prudential, one of the UK’s most respected insurance companies, has chosen Rothesay Life to secure its policyholders’ pensions over the long term in a landmark transaction for us and for the industry.”

Author spotlight

Christopher Copper-Ind

Christopher Copper-Ind is editor-in-chief of International Investment. Before this, he was editorial director of The Business Year, from 2014 to 2017.