Rothesay buys £6bn Scottish Widows bulk annuity book
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Pensions risk transfer specialist Rothesay has bought a bulk annuity portfolio from Lloyds Banking Group, subject to regulatory approval. The in-force book to be transferred covers the pension benefits of about 42,000 people.
This is the sixth such deal by Rothesay according to the firm.
Chief executive Tom Pearce said: “I am delighted that Lloyds Banking Group has chosen Rothesay as the long-term home for its bulk annuity business and look forward to welcoming our new policyholders from Scottish Widows.”
Pearce added that Rothesay has “substantial capital resources” and “proven strength” of execution capabilities. Rothesay has more than £60bn in assets under management and pays out an average £2.5bn in pension payments per year.
Lloyds said the transaction will allow it to focus on growing strategically important lines of business.
Chira Barua, CEO of Scottish Widows and CEO insurance, pensions and investments at Lloyds Banking Group, said: “This sale will enable us to focus and invest in the insurance, pensions, investments, retirement and protection markets where we want to grow, whilst ensuring positive outcomes for our bulk annuities customers.”
The overall financial impact of the sale on Lloyds Banking Group is not material, the group said.
The transaction is initially structured as a reinsurance agreement for the in-force bulk annuity portfolio, with a transfer of business under Part VII of the Financial Services & Markets Act 2000 following in 2025.
In 2019, the acquisition of a £12bn annuity book by Rothesay from Prudential was blocked by the High Court despite regulatory approval, sending shockwaves through the sector. The judgment was later successfully appealed, and the transfer was approved in late 2021.
The UK pensions risk transfer market has been buoyed by higher interest rates, which have brought buyout plans forward for many schemes as they have seen funding levels increase. This greater market activity has also brought new entrants and re-entrants to the market, including M&G and Royal London.
Do you expect to see more bulk annuity transfers like these as the market grows?
