Rothesay reports record financial performance amid decline in bulk annuity deals

Rothesay wrote £7bn of new pension bulk annuity business during 2020, less than half the £16.3bn completed in 2019, amid record financial performance and "significant" growth for the group.

The company's full year trading update confirmed that it had assisted 12 schemes in de-risking their pension liabilities, including a follow-on buy-in with National Grid.

In addition to this, the group saw a number of new business opportunities, including its first Local Government Pension Scheme policy with Aberdeen City Council, and transactions with Littlewoods, and Marathon Services, with the business now securing the pensions of over 845,000 people.

The group’s assets under management also grew from £53.7bn in 2019 to £62bn, with an average asset portfolio rating of AA.

The “strong growth” in assets over the past two years was reflected in the groups record financial performance of £1.47bn on a consolidated basis in 2020, more than double the £640m reported in 2019.

Rothesay attributed this to the successful deployment of considerable assets received as premium in 2019, stating that this was consistent with the group's long-term and secured investment strategy.

The group also reported “significant growth” in its market consistent embedded value over the past two years as a result of this “strong performance”, increasing to £7bn in 2020, compared to £6bn in 2019 and £3.4bn in 2018.

Alongside this, the group highlighted that GIC and MassMutual have both increased their investment in the group, having purchased Blackstone’s 36 per cent holding in the annuity provider, in a transaction valuing Rothesay at £5.75bn.

More broadly, Rothesay stressed that despite the "unprecedented challenge" of Covid-19, all areas of the business had remained “fully functional” throughout the year, reporting a 21 per cent growth in employees since 2019.

Commenting on the results, Rothesay chief executive officer, Addy Loudiadis, stated: “2020 was a very strong year for Rothesay despite the unprecedented challenge of Covid-19.

“This year, more than ever, we have seen the value of the purpose-built risk management infrastructure that we have developed to protect policyholders’ pensions.

“This has allowed us to effectively navigate significant volatility throughout the year while continuing to write very large volumes of new business. I am incredibly proud of the way in which our people have responded to the crisis.

“Through their determined efforts we have maintained our financial and operational resilience while delivering consistently excellent levels of customer service for our policyholders."

She concluded: “We enter 2021 exclusive on, or having closed, a combined £1.2bn of new business and expect it to be another busy year in the bulk annuity market.

“Our strong capital position and supportive shareholders ensure that we are well positioned to pursue these and other strategic opportunities. I look forward to the year ahead with confidence about what the future holds for Rothesay, our customers and our stakeholders.”

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