14 March 2018Insurance

Prudential sells £12bn UK annuity portfolio to 'de-risk' business

UK life insurer Prudential has sold a £12 billion UK annuity portfolio to Rothesay Life.

The move is in line with the group's strategy to transition towards a "more capital efficient, de-risked business model".

Under the agreement, the group's M&G Prudential arm has reinsured £12 billion of liabilities to Rothesay Life, which is expected to be followed by a Part VII transfer of the portfolio by the end of 2019.

The capital benefit of this transaction will be retained within the group to support the demerger process. The company announced plans to demerge its European business from the US and Asian business.

The IFRS liabilities relating to M&G Prudential’s total UK shareholder annuity portfolio as at Dec. 31, 2017 were £32.6 billion. Based on asset and liability values as at Dec. 31, 2017, the transaction is estimated to give rise to a pre-tax IFRS loss of around £500 million in the first half of 2018, alongside the de-risking being achieved.

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More on this story

14 March 2018   UK-based life insurance group Prudential is to demerge its UK & Europe business (M&G Prudential) from the US, Asia and Africa business, creating two separately-listed companies.
13 April 2018   Strategically, insurers are reducing the capital intensity of the business by focussing on health, protection, unit-linked, asset management and short-tail property/casualty (P&C) lines, according to Morgan Stanley.
7 January 2019   Insurer Rothesay Life is mulling making a £3.5 billion bid for ReAssure, Swiss Re’s UK closed book business, potentially jeopardising plans to list the unit this year, according to reports.