Goldman Sachs-backed pension buyout specialist Rothesay Life has agreed to buy £6 billion of annuities from Scottish Equitable plc, the UK subsidiary of Dutch insurance and investment giant Aegon N.V.
Rothesay Life’s investors include Goldman, Blackstone, Singapore fund GIC and life insurance firm MassMutual.
The firm said it was established in 2007 “and has grown to be a leading life insurer specialising in bulk annuities and other derisking solutions for defined benefit pension schemes and insurance companies.”
The transaction covers 187,000 policyholders — and two thirds of Aegon’s UK annuity portfolio.
Aegon said the transaction was consistent with the company’s ambition to free up capital from non-core businesses.
Under the terms of the deal, Aegon will reinsure £6 billion of liabilities to Rothesay Life.
Aegon said it is “exploring options” to divest the remainder of its UK annuity portfolio.
Some insurance and investment firms want to reduce their exposure to UK annuities, which provide an income for retirement, following recent reforms that gave British people more flexibility over their pensions and affected demand for annuities.
“This is an important step in the process to fully divest our UK annuity portfolio, and will enable us to focus on our fast-growing platform in the UK,” said Alex Wynaendts, CEO of Aegon.
“We are confident that this transaction is also in the best interests of our annuity customers, as Rothesay Life is an established and respected specialist provider in the UK annuity market.”
Aegon said it has not been an active player in the UK annuity market since 2010.
It said that to ensure a smooth transition for its customers, Aegon and Rothesay Life will put a “migration plan” in place in which the administration of the annuity portfolio will be executed by Aegon until the transfer is completed.
Addy Loudiadis, chief executive of Rothesay Life, said: “As a specialist provider of annuities, I am delighted that Aegon has chosen Rothesay Life to secure its policyholders’ pensions over the long term.
“This transaction represents a significant step for Rothesay Life taking total assets under management to over £20 billion and total lives insured to over 400,000.
“The prevalence of non-core businesses in multi-line insurers is creating opportunities for Rothesay Life.
“With the market set to expand and strong support from our shareholders, Rothesay Life is well positioned to pursue these opportunities in addition to our ongoing bulk annuity business.”