The deal, which encompasses the pension benefits of nearly 42,000 individuals, is said to be in line with Lloyds Banking Group's objective of becoming a customer-focused digital leader and integrated financial services provider


Lloyds Banking Group to offload £6bn bulk annuity portfolio to Rothesay. (Credit: Lemur12/Wikimedia Commons)

UK-based pensions insurance specialist Rothesay has reached an agreement to purchase the in-force bulk annuity portfolio of approximately £6bn from Scottish Widows, a division of Lloyds Banking Group.

The transaction encompasses the pension benefits of nearly 42,000 individuals.

The deal is said to align with Lloyds Banking Group’s objective of becoming a customer-focused digital leader and integrated financial services provider. online loans.

The move will allow Lloyds Banking Group to concentrate on expanding strategically significant lines of business, including insurance, investments, retirement, and pensions, utilising both direct and intermediary channels for growth.

Lloyds Banking Group insurance, pensions and investments CEO and Scottish Widows CEO Chira Barua said: “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.”

The acquisition of the Scottish Widows portfolio marks Rothesay’s sixth acquisition of in-force annuities and is said to showcase the latter’s capabilities in the pension risk transfer market.

Rothesay has more than £60bn in assets under management and an average annual payout of £2.5bn.

Rothesay CEO Tom Pearce said: “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.”

The transaction, contingent upon regulatory approval, is initially structured as a reinsurance agreement for the in-force bulk annuity portfolio, with a Part VII process scheduled for the following year.

Scottish Widows will continue to service policies until the effective date of the Part VII transfer, after which policyholders will start receiving benefits from Rothesay in the usual manner. No action is required from policyholders, said the parties.

Fenchurch Advisory Partners, Morgan Stanley, and Herbert Smith Freehills provided advisory services to Lloyds Banking Group and Scottish Widows for the transaction. Rothesay received advisory support from JP Morgan and CMS.