Lloyds Banking Group’s Strategic Move: Scottish Widows’ Bulk Annuities Sold to Rothesay

Lloyds Banking Group’s Strategic Move: Scottish Widows’ Bulk Annuities Sold to Rothesay

(IN BRIEF) Rothesay, the UK’s leading pensions insurance specialist, has agreed to acquire Scottish Widows’ in-force bulk annuity portfolio from Lloyds Banking Group for approximately £6 billion. The transaction covers the pension benefits of around 42,000 individuals. This move aligns with Lloyds Banking Group’s strategy to focus on becoming a customer-focused digital leader and integrated financial services provider. Rothesay’s acquisition, its sixth of in-force annuities, highlights its strong capabilities in the pension risk transfer market. With assets under management exceeding £60 billion, Rothesay is dedicated to providing secure solutions for policyholders and delivering exceptional customer service. The transaction is subject to regulatory approval and will involve a reinsurance agreement initially, with a Part VII transfer process to follow.

(PRESS RELEASE) LONDON, 13-Mar-2024 — /EuropaWire/ — Lloyds Banking Group, a leading UK based financial services group, announces its agreement with Rothesay, the leading pensions insurance specialist in the UK, to acquire the approximately £6 billion Scottish Widows in-force bulk annuity portfolio. This acquisition covers the pension benefits of approximately 42,000 individuals.

Aligned with Lloyds Banking Group’s strategic vision of becoming a customer-focused digital leader and integrated financial services provider, this transaction allows Lloyds to concentrate on enhancing its strategically significant lines of business, including insurance, investments, retirement, and pensions, through both direct and intermediary channels.

For Rothesay, this marks the sixth acquisition of in-force annuities, underscoring the company’s robust capabilities in the pension risk transfer market. With assets under management exceeding £60 billion and an average annual payout of £2.5 billion in pension payments, Rothesay is dedicated to securing the future of its policyholders. Trusted by the pension schemes of renowned UK companies, Rothesay is committed to providing pension risk transfer solutions and delivering award-winning levels of customer service.

The transaction, subject to 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. Policyholders will continue to be served by Scottish Widows until the effective date of the Part VII transfer, at which point they will seamlessly receive benefits from Rothesay without any necessary action on their part.

Tom Pearce, Chief Executive Officer at Rothesay, expressed his enthusiasm, stating, “I am delighted that Lloyds Banking Group has chosen Rothesay as the long-term home for its bulk annuity business and look forward to welcoming our new policyholders from Scottish Widows. 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.”

Chira Barua, CEO of Scottish Widows and CEO Insurance, Pensions and Investments at Lloyds Banking Group, affirmed the company’s commitment to supporting customers in building financially secure futures. Barua added, “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.”

ENDS

Media Contacts – for Rothesay

Rothesay: Anthony Marlowe, Head of Communications & Public Affairs
+44 (0)7912 550184 or anthony.marlowe@rothesay.com
Temple Bar Advisory: Alex Child-Villiers +44 (0)7795 425580 or Sam Livingstone +44(0) 7769 655437 or
rothesay@templebaradvisory.com

Media Contacts – for Lloyds Banking Group

Matt Smith, Head of Media Relations
+44 (0) 7788 352 487 or matt.smith@lloydsbanking.com

Notes to Editors

Lloyds Banking Group and Scottish Widows were advised on the transaction by Fenchurch Advisory Partners, Morgan Stanley and Herbert Smith Freehills. Rothesay was advised by JP Morgan and CMS.

About Rothesay

Rothesay is the UK’s largest pensions insurance specialist, purpose-built to protect pension schemes and their members’ pensions. With over £60 billion of assets under management, we secure the pensions of more than 934,000 people and pay out, on average, approximately £200 million in pension payments each month.

Rothesay is dedicated to providing excellence in customer service alongside prudent underwriting, a conservative investment strategy and the careful management of risk. We are trusted by the pension schemes of some of the UK’s best known companies to provide pension solutions, including British Airways, Cadbury’s, the Civil Aviation Authority, the Co-operative Group, National Grid, Morrisons and telent.

Rothesay has two substantial institutional shareholders, GIC and Massachusetts Mutual Life Insurance Company (“MassMutual”), who provide the company with long-term support for its growth and development.

Rothesay refers to Rothesay Limited and its subsidiaries and is the trading name for Rothesay Life Plc, an insurance company authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number: 466067. Rothesay Life Plc is registered in England and Wales with company registration number: 06127279 and registered address: Rothesay Life Plc, The Post Building, 100 Museum Street, London WC1A 1PB. Further information is available at www.rothesay.com

About Scottish Widows and Lloyds Banking Group

Lloyds Banking Group is the UK’s largest digital bank and leading financial services group. Its insurance division helps millions of customers with their long-term protection, retirement and investment needs, including life insurance, pensions, investments and general insurance (home and car).

Scottish Widows was founded in 1815 and is part of the Group’s insurance division. With nearly £170bn assets under administration and six million customers, Scottish Widows’ award‐winning product range includes workplace and individual pensions, annuities, life cover, critical illness, income protection as well as savings and investment products. Customers can access its products and services through independent financial advisers, directly, and through all Lloyds Bank, Bank of Scotland and Halifax branches.

Scottish Widows entered the Bulk Annuity market in 2015 and with a market share of less than 5%, is one of the smaller participants in the market.

SOURCE: Lloyds Bank plc