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Prudential and Rothesay Life in £960 million reinsurance agreement

17 March 2017

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Prudential Retirement and Rothesay Life PLC have announced a new deal for pension liabilities covering around 22,500 pensioners.

Prudential will assume the longevity risk for £960 million ($1.2 billion) in pension liabilities from Rothesay.

The deal is the sixth longevity reinsurance transaction since 2011 between the two organisations which, Prudential says, reaffirms the strength of the growing partnership.

The two companies struck their previous longevity reinsurance agreements between 2011 and 2014.

Amy Kessler, head of Prudential Retirement's Longevity Risk Transfer business, said: "Through six years and six transactions, our teams have worked consistently and collaboratively to meet Rothesay's longevity reinsurance needs and help secure theretirement benefits for thousands of UK pensions."

Prudential Retirement offers retirement plan solutions for public, private, and non-profit organisations, with $386.2 billion in retirement account values as of 31 December 2016.

Rothesay Life was established in 2007 and it has grown to become the UK's fourth-largest annuity provider, with more than £20 billion in assets under management.

The transaction is indicative of the thriving market for UK pension de-risking, and the continuing focus of UK group annuity writers on optimising capital and managing risk with longevity reinsurance solutions.

Tom Pearce, managing director at Rothesay Life, said: "We are delighted to have completed this transaction with Prudential, building upon the longstanding relationship between the two firms.

"This agreement further underscores our proactive approach to risk management, as we provide for the secure retirement of thousands of annuitants."

David Lang, vice president of product development, who led the transaction for Prudential Retirement, added: "The growing UK market for pension de-risking has created a significant need for reinsurance solutions."

"As part of our long-term partnership, Rothesay consistently taps into Prudential's longevity reinsurance capacity and expertise to support its pension risk transfer business in the UK."

First published 17.03.2017

Lindsay.sharman@wilmingtonplc.com