Rothesay has agreed to acquire Scottish Widows’ in-force bulk annuity portfolio of around £6bn from Lloyds Banking Group.

The business to be transferred covers the pension benefits of approximately 42,000 people.

Lloyds Banking Group and Scottish Widows were advised on the transaction by Fenchurch Advisory Partners, Morgan Stanley and Herbert Smith Freehills, while Rothesay was advised by JP Morgan and CMS.

Rothesay’s acquisition of the Scottish Widows portfolio is Rothesay’s sixth acquisition of in-force annuities.

The pension insurer has more than £60bn in assets under management and pays out an average of £2.5bn in pension payments each year.

Lloyds Banking Group said the transaction was in line with its strategy and enabled it to focus on growing “strategically important lines of business”, such as insurance, investments, retirement, and pensions, through direct and intermediary channels.

The transaction is subject to regulatory approval and is initially structured as a reinsurance agreement for the bulk annuity portfolio, with a Part VII process to follow in 2025.

Policies will continue to be serviced by Scottish Widows until the effective date of the Part VII transfer, when people will begin to receive their benefits in the normal way from Rothesay.

Commenting on the announcement, Rothesay chief executive officer, Tom Pearce, said: “I am delighted that Lloyds Banking Group has chosen Rothesay as the long-term home for its bulk annuity business and look forward to welcoming our new policyholders from Scottish Widows.

“Rothesay’s substantial capital resources combined with the proven strength of our execution capabilities mean we are able to deliver solutions for our clients across all areas of the pension de-risking market.”

Scottish Widows CEO and Lloyds Banking Group CEO insurance, pensions and investment, Chira Barua, added: “We’re on a mission to help people in the UK build financially secure futures, supporting the group’s strategy of building a customer-focused digital leader and integrated financial services provider.

“This sale will enable us to focus and invest in the insurance, pensions, investments, retirement and protection markets where we want to grow, whilst ensuring positive outcomes for our bulk annuities customers.”

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