Legal & General (L&G) has acquired Lucida, a closed annuity buy-out company, for around £151m.

The entire share capital of Lucida, which has a portfolio of £1.4bn of annuity assets, has been bought by L&G's Legal & General Assurance Society and the deal is expected to be completed in Q3 2013 once it is approved by the Financial Conduct Authority and the Prudential Regulation Authority.

Lucida closed to new business in November 2012 and is currently responsible for over 31,000 pensions in payment.

Kerrigan Procter, L&G managing director annuities, said: "We identified retirement solutions as one of our five themes for growth, and I'm delighted today to be able to announce our first acquisition in this arena.

He added: "This acquisition will benefit Lucida's customers, by providing them with the comfort of knowing their pensions will be paid by a longstanding, trusted and well capitalised business."

L&G said the £151m cash consideration will be funded from the surplus held within the group.

Lucida was founded in 2006 and implemented bulk annuity arrangements with the Merchant Navy Officers Pension Fund, New Ireland Assurance and the UK pension schemes of Morgan Crucible and Newell Rubbermaid.

Aon Hewitt's risk settlement group principal consultant Dominic Grimley, said: "We believe that this resolution over the ownership of the Lucida book, which has been the subject of speculation for some months, is a very positive outcome for its policyholders.

"The reassurance of long-term market commitment, a known brand and the size of L&G's existing annuity administration services will give comfort."

Grimley said the deal does not affect the existing competitiveness of the market as Lucida had closed to new business last year, but he said that it would not be ideal if the industry lost more competitors.

He said: "While we believe there is sufficient capacity in the market to cope with existing demand, if we did reach more benign investment conditions, it's conceivable that market capacity could be found wanting. That doesn't as yet seem to be a real threat but it has to be borne in mind."

Grimley added: "As things stand, market pricing has been stable in the first half of 2013, so bulk annuity opportunities continue to be available and relatively attractive. If schemes are in the right circumstance, the opportunities are there."

First published 26.06.2013

monique_simpson@wilmington.co.uk