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GIC, MassMutual to buy Blackstone's 36% stake in UK insurer Rothesay Life

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GIC and MassMutual will each become equal 49 per cent shareholders in the pension insurer.

GIC and Massachusetts Mutual Life Insurance Company (MassMutual) will increase their shareholding in the UK's largest specialist annuity provider Rothesay Life, by acquiring Blackstone's 36 per cent interest for an undisclosed sum.

Singapore's sovereign wealth fund and US-based mutual life insurer MassMutual have reached an agreement with investment giant Blackstone's Tactical Opportunities business for the deal, which values Rothesay at £5.75 billion (S$10.1 billion).

GIC and MassMutual will each become equal 49 per cent shareholders in the pension insurer, they said in a joint statement with Blackstone on Wednesday.

Blackstone, GIC and MassMutual first purchased their shares in the UK company in December 2013. According to Rothesay’s 2016 annual report, GIC and Blackstone each held 26.5 per cent at the time while MassMutual owned 6.5 per cent.

In 2017, the trio subsequently bought out Goldman Sachs’ 32.7 per cent stake in Rothesay, such that GIC and Blackstone held equal - and the biggest - stakes while MassMutual upped its interest “substantially”.

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Rothesay, which insures defined benefit - also known as final salary - pension schemes, on Wednesday said it has grown its assets under management to £56 billion, from £7.5 billion, since the trio’s initial investment.

The UK’s bulk annuity market has grown in recent years as companies look to offload the risk of operating such schemes, which pay a fixed income to retired staff for life, Reuters reported.

Rothesay will continue to provide a full range of solutions on a large scale and take full advantage of strategic prospects with a value and risk-driven approach to underwriting, said its chief executive officer Addy Loudiadis.

MassMutual and GIC "substantially" increasing their investment in Rothesay provides its business with "exceptional long-term support from two of the world's leading institutional investors", Ms Loudiadis added.

GIC chief investment officer Choo Yong Cheen said the sovereign wealth fund has confidence in Rothesay's long-term prospects, "given its highly capable management team and strong risk management practices".

Also, GIC will work closely with MassMutual to add value to Rothesay as the latter strengthens its leading position in pension de-risking solutions.

According to Blackstone senior managing director Qasim Abbas, Rothesay has expanded into attractive new asset classes, and GIC and MassMutual are the "natural long-term holders" for the UK firm.

Meanwhile, MassMutual chief investment officer Tim Corbett noted that Rothesay has experienced "tremendous growth" and has a proven business model.

Completion of the transaction is subject to regulatory approvals, according to the joint statement.

Rothesay underwrote a record £16.3 billion of new business last year - the largest total for a UK bulk annuity insurer, according to Blackstone's Mr Abbas. The UK insurer said it saw "continued strong momentum" in the first half of this year.

Rothesay secures the pensions of over 800,000 people, and provides pension solutions to major UK companies.

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