(February 8, 2013) — US mutual life insurer MassMutual has entered the burgeoning UK risk transfer market with an investment in one of the largest players in the field, it announced today.
Rothesay Life, the wholly-owned subsidiary of Goldman Sachs, has sold £100 million ($157 million) in perpetual subordinated debt to the US insurer to replace some of its existing debt.
The securitised bond acts like a preferred share in that it pays a fixed coupon to the investor in the same way as a fixed-rate dividend. Its ‘perpetual’ tag means that there is no maturation date for the bond; instead the issuer can choose to repay as and when it likes – or not.
“Demand for risk management from UK defined benefit pension schemes offers significant growth opportunities,” said M. Timothy Corbett, CIO at MassMutual. “Our investment in Rothesay Life supports our view that the company is well-positioned to capitalise on this opportunity.”
Since launching in 2007, and writing little business in its early years, Rothesay Life has become one of the more prolific issuers of pension insurance.
In January the company announced it would take on £115 million of food distributer Vestey Group’s retirement obligations. This pushed Rothesay to the top of bulk pension annuity providers in the UK.
The company has also taken on assets and liabilities of Merchant Navy Officers Pension Fund and General Motors UK Retirees Pension Plan, pushing its business to total over £1 billion.
The company acquired one of the initially leading companies in the field, Paternoster, in 2011.