The insurance company Standard Life is offloading responsibility for more than half of its customers who are receiving annuities. The £6.7bn worth of assets which were used to back-up or “insure” the policies have now been transferred to Canada Life International Reinsurance.
T he biggest advantage that Standard Life got from this offloading transfer is that it is now free of any risk that these people might live longer than expected.
"It substantially reduces pure longevity risk while providing a significant increase to embedded value, a release of cash and a reduction in capital requirements," said Standard Life's chief executive, Sandy Crombie.
"It creates capacity to broaden our innovative product range and take advantage of the profitable opportunities available to us."
Almost all the affected transfers are those of the individual UK customers, who have their pension fund investments or money with Standard life. They are largely people who had invested in a Standard Life pension policy before it demutualised in 2006 and had taken out an annuity with the company on retirement.
This is not the first transaction that has happened in recent times. Such bulk deals have become very common in the past few years in the insurance industry, with insurers either transferring chunks of their business to each other, or taking on responsibility for managing closed final-salary pension schemes.
The Standard Life deal is the biggest till date, overcoming others such as Equitable Life transferring £4.6bn worth of assets to Canada Life in 2006.
| Insurance experts say that some firms, like Canada Life International Reinsurance in this case, are happy to take on this pension or annuity business to try to make a profit through managing the underlying assets. | Table of Contents |
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