3 April 2019

Rothesay Life's 2018 Full Year Financial Results and Business Highlights

Rothesay Life, one of the leading life insurers specialising in providing de-risking solutions to UK defined benefit pension schemes and insurance companies, announces its audited results and business highlights for the year ending 31 December 2018.

Commenting on Rothesay Life’s results Chief Executive Addy Loudiadis, said: “2018 was an exceptional year for Rothesay Life having completed a record £13.2bn of new business and grown MCEV by 50% to £3.4bn. The Group’s assets under management increased to £36.3bn and our solvency position at year end was very strong at 181% SCR cover.”

She continued: “The pipeline in our core bulk annuity market has never looked stronger and we will continue to explore opportunities to help other insurers de-risk or sell non-core in-force business where our track record is second to none.” 

Business Highlights

  • £12bn annuity back-book transaction: As previously announced, the Group successfully completed the reinsurance of a £12bn block of in-force annuity business from Prudential plc (the ‘Prudential transaction’). This was the largest transaction of its type ever executed in the UK.
    Following completion of the Prudential transaction, we chose to de-risk the underlying assets and reinvest cautiously to take advantage of attractive market opportunities. 
  • New business: In addition to the Prudential transaction, the Group assisted five pension schemes to de-risk their liabilities taking total new business premiums to a record level for the Group of £13.2bn (2017: £1.2bn).
  • Equity release mortgages: The Group has increased its holdings of equity release mortgages to £1.9bn (2017: £539m) by both funding new mortgages and through the purchase of in-force books. The most notable transaction was the previously announced acquisition of an £860m portfolio from UK Asset Resolution (UKAR). Equity release mortgages now represent 5% of our total assets under management.
  • Pensions Administration Standards Association (PASA): In 2018 we became the first insurance company to have gained Accreditation by PASA, an independent body dedicated to improving standards in pensions administration.
  • People: We have continued to invest in the business through recruitment across the Group at all levels, including the appointment of a new Chief Technology Officer, a new Chief Auditor and a new in-house Chief Actuary. Our total headcount is now 210.

Financial Highlights and Capital

  • Solvency position: As at 31 December 2018 the Group’s SCR coverage was 181% (2017: 169%) and Rothesay Life Plc’s coverage was 180% (2017: 163%). Group SCR coverage without transitional solvency relief was 153%.  
  • Partial internal model: The Group received approval from the PRA to use its partial internal model for modelling the solvency capital requirement (SCR) for credit and counterparty risk from 31 December 2018.
  • Assets under management: The Group’s assets under management increased by 50% to £36.3bn (2017: £24.2bn).
  • Market Consistent Embedded Value (MCEV): The Group’s MCEV has increased by 50% to £3,441m (2017: £2,301m).
  • IFRS pre-tax profit: Profits arise from writing new business as the premium is invested in our target portfolio of assets. Due to a cautious approach to markets, at year-end we had only partially invested the assets received from Prudential and, based on investments made to date and pipeline, expect a further £250m of profits to arise as we complete investments. This timing effect from investments combined with our decision to increase the reserves held against credit defaults as credit spreads widened during the year resulted in profits for 2018 being dampened to £102m (2017: £312m).
  • Equity Release Mortgages: In December 2018, the PRA published Policy Statement 31/18 and Supervisory Statement 3/17 on equity release mortgages. The Group can already meet the Effective Value Test and, if implemented today, the statement would have no impact on the Group’s solvency position. 
  • Credit rating: Rothesay Life Plc was assigned an insurance financial strength rating of A3 by Moody’s Investors Service and A+ by Fitch Ratings.

Notes:

  • Rothesay Life Plc is the regulated insurance company within the Rothesay Holdco UK Limited group. 
  • The Group has today published its report and accounts, the Solvency & Financial Condition Report and a separate MCEV report.

For further information, please contact:

Temple Bar Advisory                                        020 7002 1080

Alex Child-Villiers or William Barker                    07795 425580 / 07827 960151

About Rothesay Life

Rothesay Life was established in 2007 and has become one of the leading providers of regulated insurance solutions in the U.K. market for pensions de-risking. This strong growth has been achieved through the steady accumulation of pension scheme clients, significant strategic acquisitions and the reinsurance of annuity portfolios.  Rothesay Life has assets under management of over £36bn and insures the pensions of over 770,000 individuals.

Existing Rothesay Life clients include the pension schemes and customers associated with such names as Prudential, RSA, British Airways, Rank, Uniq, General Motors, the MNOPF (Merchant Navy Officers Pension Fund), InterContinental Hotels, Philips, GKN, Lehman Brothers, Aegon, Zurich Assurance, the Post Office and the Civil Aviation Authority.

Rothesay Life was founded on several core pillars:

  • Clear and disciplined business strategy;
  • Prudent underwriting;
  • Meticulous management of risk and cautious investment strategy offering absolute customer security;
  • Excellence in execution; and
  • Robust operational processes underpinning excellent customer service

Rothesay Life has three substantial institutional shareholders, Blackstone, GIC and Massachusetts Mutual Life Insurance Company, who provide the company with long term support for its growth and development.

Rothesay Life is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Further information is available at www.rothesaylife.com.

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