UK insurer Zurich is to transfer £1.2 billion ($1.9 billion) of individual annuities to Rothesay Life as it seeks to offload parts of its legacy business.
Under the agreement, Rothesay will initially reinsure 28,000 policies before taking on full responsibility for payment and administration through a “part VII transfer” once regulatory and court approval has been granted. A part VII transfer is a UK legal process for the transfer of insurance business.
Rothesay Life—founded in 2007 as a subsidiary of Goldman Sachs—reinsured £2.8 billion of longevity risk last year, a record figure for the company. So far in 2015 the group has taken on £1.7 billion of new business, including a £675 million buy-in of the Lehman Brothers UK pension fund.
Gary Shaughnessy, CEO of Zurich UK Life, said the deal “reduces our risk exposure” and is part of a broader aim to refocus the business and achieve “sustained profitable growth”. The transaction also follows Zurich’s offloading of £3.9 billion of annuities to Windsor Life in 2007.
Rothesay Life CEO Addy Loudiadis added that the agreement was part of “an increasing trend of legacy annuity books transferring to specialists”.
As well as writing reinsurance and other pension risk transfer business, Rothesay has also been acquisitive in recent years. In 2011 it bought Paternoster, bringing across £3 billion of bulk annuity business, and last year the group acquired MetLife Assurance, including its £2.5 billion portfolio.
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