MetLife, Inc. (MET) became the latest U.K. corporate pensions insurer to quit the market, after it announced a deal with Rothesay Life – the pensions insurer founded by The Goldman Sachs Group, Inc. (GS). Rothesay will acquire MetLife Assurance Ltd., a subsidiary of MetLife in the U.K.
Established in 2007, MetLife Assurance Ltd. is MetLife’s specialist bulk annuity pension provider. The deal is expected to be completed in the second quarter. However, the financial terms of the deal were not disclosed by either company.
The deal will result in the exit of MetLife from the U.K. pensions buyout market and follows Lucida Plc’s sale to Legal & General Plc last year. However, sale of the U.K.-based bulk annuity pension provider will not affect MetLife's other businesses such as wealth management and employee benefits arm in the U.K. Further, benefit obligations to trustees and pension payments to individual policyholders will not be impacted by the sale.
Rothesay’s decision to acquire the bulk annuity pension provider is primarily based on strong growth in the UK pension de-risking market in recent times. With transaction levels matching that of the pre-financial crisis level, Rothesay plans to capitalize on MetLife’s reputation and expertise in the U.K. market. The deal, when completed will make Rothesay the largest provider of defined benefit de-risking solutions in the U.K., with more than £10 billion of assets under management.
MetLife’s decision to quit the pensions buyout market reflects the firm’s decision to redirect capital investment with the target of producing instant returns. Since the bulk purchase annuity business generally demands large capital investment, MetLife is seeking to free capital by exiting the business to make opportunistic acquisitions in other areas.
MetLife currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include AEGON N.V. (AEG) and FBL Financial Group Inc. (FFG), both of which have a Zacks Rank #2 (Buy).
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