Two previously undisclosed transactions with Rothesay Life amount to $6 billion in new longevity reinsurance business completed by Prudential Financial
Alex Child-Villiers/William Barker
+44 (0)207 975 1415
+44 (0)7795 425580
NEWARK, N.J., February 18, 2020 - The Prudential Insurance Company of America (PICA), a business unit of Prudential Financial, Inc. (NYSE: PRU), and a recognized leader in the global pension de-risking market, has announced the closing of its seventh and eighth strategic longevity reinsurance transactions with Rothesay Life Plc, reinsuring a combined $6 billion of pension liabilities associated with two bulk annuity transactions completed in the second half of 2019.
“2019 was an extraordinary year in the global risk transfer markets, having started the year at the best funded status that U.S., U.K. and Canadian pension funds had seen since the financial crisis,” said Amy Kessler, head of longevity risk transfer for PICA. “This, together with excellent asset availability, a vibrant, well-capitalized insurer and reinsurer market allowed many schemes to transact ahead of when they might have expected to and put the industry on a path to break records in 2019.”
Kessler added, “in late 2019 and early 2020 we have observed some weakening in funded status, and many sponsors will need to monitor the market closely as strong insurer and reinsurer pricing continue to provide opportunities for sponsors to de-risk.”
“These transactions with Rothesay Life prove the value of being prepared,” said Scott Gaul, who on Dec. 1 took over Prudential Retirement’s Investment and Pension Solutions businesses. “They were pursued in a thoughtful and efficient manner, driven by long-term de-risking goals set by the pension schemes, culminating in the ability to transfer risk in an incredibly busy marketplace. Looking ahead to 2020, in order for opportunistic transactions to work in our extremely busy pension risk transfer markets, the scheme, consultants, insurers and reinsurers all have to be aligned, prepared, and ready to act.”
Dave Lang, vice president and Prudential’s relationship manager for Rothesay, added the two new transactions demonstrate Rothesay Life’s ability to identify a market opportunity and assemble the right team to capitalize on it. “The longstanding partnership between Prudential and Rothesay Life dates back to our first transaction in 2011,” Lang said. “This trusting relationship helped get these two very important transactions done while market conditions held.”
“2019 was a record year for Rothesay Life, and we were delighted to have PICA alongside us to provide reinsurance on two of the largest transactions of the year,” said David Cox, head of reinsurance, Rothesay Life. “The Rothesay Life and PICA teams have been working together for nearly a decade now, and the well-established relationship and processes enabled us to close two deals in a timely and efficient manner.”
Gaul and Kessler added that while volatility has increased, they both see a strong start to the market this year, noting activity with many small to midsize plan sponsors who are taking advantage of the current market opportunity. “In 2020, smaller transactions will be a growth area to watch, as will the burgeoning risk transfer markets in Canada and the Netherlands,” Kessler concluded.
About Prudential Retirement
Prudential Retirement delivers retirement plan solutions for public, private, and nonprofit organizations. Services include defined contribution, defined benefit and nonqualified deferred compensation record keeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services.
With more than 85 years of retirement experience, Prudential Retirement helps meet the needs of 4.5 million participants and annuitants. Prudential Retirement has $500 billion in retirement account values as of Dec. 31, 2019. Retirement products and services are provided by The Prudential Insurance Company of America (PICA), Newark, N.J., or its affiliates.
PICA issued the reinsurance from the United States. Neither PICA nor PRIAC is licensed or regulated by the U.K. Prudential Regulation Authority as an insurer or regulated by the Financial Conduct Authority, nor does either offer reinsurance in the United Kingdom or directly insure U.K. pension risks.
Insurance products are issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, or The Prudential Insurance Company of America (PICA), Newark, NJ. Both are Prudential Financial companies. Each company is solely responsible for its financial condition and contractual obligations.
About Prudential Financial, Inc.
Prudential Financial, Inc. (NYSE: PRU), a financial wellness leader and premier active global investment manager with more than $1.5 trillion in assets under management as of Dec. 31, 2019, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees help to make lives better by creating financial opportunity for more people. Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit news.prudential.com.
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 £50 bn and insures the pensions of over 800,000 individuals.
Existing Rothesay Life clients include the pension schemes and customers associated with such names as Asda, National Grid, Allied Domecq, Cadbury’s, telent, Prudential, British Airways, 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 supporting enhanced 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 rothesaylife.com.