Rothesay Life Takes On Zurich Annuity Business

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.

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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.

UK Prime Minister David Cameron has named high-profile campaigner Ros Altmann as the country’s new pensions minister.

The appointment follows last week’s election victory for Cameron’s Conservative party, which also saw long-serving pensions minister Steve Webb lose his seat.

“Having an unelected new peer as the pension minister is bound to attract criticism from some quarters.” —Malcolm McLean, Barnett WaddinghamAltmann was lined up to become a member of the House of Lords, the UK’s upper house, earlier this year, with Cameron stating last month she would become minister for consumer protection.

As Cameron named his cabinet yesterday, however, he tapped Altmann for the pensions minister role. She was previously an adviser to Tony Blair’s Labour government on pensions and retirement issues. In her new role, she will oversee the implementation of the government’s new “pension freedoms”, which remove the obligation for retirees to purchase an annuity.

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Altmann has publicly stated support for the Labour and Liberal Democrat parties in the past, although in the run-up to last week’s election she wrote on her website that “the current economic and political realities lead me to conclude that the future of the country I love is at risk if the Conservatives do not form the next government.”

Official tweet announcing Ros Altmann's appointment “I am not ‘tribal’ in my political allegiances,” she wrote. “I don’t blindly follow a particular party or ideology. But putting Labour back in charge at this time could be disastrous for the United Kingdom.”

Posting on Twitter immediately following Prime Minister Cameron’s announcement, Altmann said she was “really looking forward to [helping] more people”.

“A party for working people must also be a party for private sector businesses [that] create the jobs the working families need,” Altmann added. “Business and workers are not opponents. Each needs the other to succeed. Balancing interests carefully is key to successful policy. Helping business also means making sure customers are treated fairly, as that should help business thrive in [the] long term.”

“Having an unelected new peer as the pension minister is bound to attract criticism from some quarters and Ros will have to accept that her position within government will not now allow her the luxury of claiming to be an independent consumer champion and criticising conservative policies from outside,” said Malcolm McLean, senior consultant at Barnett Waddingham.

Earlier in her career Altmann held investment positions at Chase Manhattan, Rothschild Asset Management, and NatWest Investment Management, among other organizations.

Altmann has a degree in economics from University College London, a PhD in economics from the London School of Economics, and was a Kennedy Scholar at Harvard University.

Meanwhile, Iain Duncan Smith was re-appointed as the UK’s work and pensions minister.