Lloyds Banking Group is selling its £6bn Scottish Widows in-force bulk annuity portfolio to Rothesay. The business to be transferred covers the pension benefits of approximately 42,000 people.
The acquisition of the Scottish Widows portfolio represents Rothesay’s sixth acquisition of in-force annuities. The transaction, which is subject to regulatory approval, is initially structured as a reinsurance agreement for the in-force bulk annuity portfolio, with a Part VII process to follow next year.
“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,” said Tom Pearce, Rothesay Chief Executive Officer.
“Rothesay’s substantial capital resources combined with the proven strength of our execution capabilities mean we are able to deliver solutions for our clients across all areas of the pension de-risking market. We are proud to provide award-winning levels of customer service for our policyholders along with long-term security for their retirement,” he added.
Policies will continue to be serviced by Scottish Widows until the effective date of the Part VII transfer at which point they will begin to receive benefits in the normal way from Rothesay.
For Lloyds, the transaction is in line with its existing strategy that centres around lines of business such as insurance, investments, retirement and pensions, through direct and intermediary channels.
“We’re on a mission to help people in the UK build financially secure futures, supporting the group’s strategy of building a customer-focussed digital leader and integrated financial services provider. 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,” said Chira Barua, CEO of Scottish Widows and CEO Insurance, Pensions and Investments at Lloyds Banking Group.
The news of the sale comes during a notable week in the UK pension risk transfer market. On 8 March, Royal London published a press release detailing its 2023 results; notably, the release stated that it had: “Extended our annuity capabilities in advance of an intended participation in the bulk purchase annuities market, focused on providing a competitive solution to the trustees of defined benefit pension schemes”.