Pensions insurance provider Rothesay Life will acquire MetLife Assurance.

The acquisition is expected to be completed in the second quarter of this year, subject to regulatory approval, however the actual terms of the agreement have not been disclosed.

MetLife Assurance is a subsidiary of MetLife and has approximately £3bn in assets under management.

Addy Loudiadis, Rothesay Life CEO, said: "The acquisition of MetLife Assurance makes Rothesay Life the U.K.'s largest dedicated provider of defined benefit (DB) de-risking solutions, with over £10bn of assets under management."

Since the start of 2013, Rothesay Life has concluded £1.8bn of transactions and it expects there to be further long-term expansion in pension insurance buyouts and buy-ins.

MetLife Assurance was established in 2007 and supplied bulk annuities in the UK and Irish markets, securing the benefits of more than 20,000 members.

MetLife's decision to sell MetLife Assurance does not involve its other businesses.

MetLife was advised by Citigroup Capital Markets Inc and CMS Cameron McKenna LLP on the transaction, and Rothesay Life was advised by Goldman Sachs and Linklaters LLP.

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

"The reassurance of Rothesay Life's size, reputation and market commitment will give comfort. We expect that Rothesay Life will already be considering how the MetLife assets are invested. The administration transition will also be helped by Rothesay Life's existing relationship with JLT, benefit administrators for MetLife and for the £3bn Paternoster backbook that Rothesay Life acquired in 2011."

He added: "Rothesay Life will continue to seek larger deals over £100m, but the acquisition gives them the opportunity to expand their target market downwards.

"MetLife have continued to quote for new business, but with understandably less traction while their future was undecided. So, in this case, the loss of a provider may in practice provide another viable option for schemes that could not previously obtain a quotation from Rothesay Life."

First published 18.02.2014

monique_simpson@wilmington.co.uk