Key facts
- Standard Life has formed a partnership with a consortium including CVC and Goldman Sachs.
- The consortium will commit up to £2 billion over five years to Standard Life's pension risk transfer business.
- Standard Life will contribute £500 million, funded from its annual excess cash generation.
- Standard Life will control 51% of the voting rights within the partnership.
- The partnership aims to enhance Standard Life's ability to secure large corporate pension deals by utilizing partners' capital and investment expertise.
Standard Life has entered a significant partnership with a consortium led by CVC, which includes Goldman Sachs and Prudential, to bolster its pension risk transfer (PRT) business. The deal commits up to £2 billion over the next five years, with Standard Life contributing £500 million from its annual excess cash generation. Standard Life will hold a 51% controlling stake in the partnership.
This collaboration aims to leverage the partners' substantial capital reserves and expertise in private markets to enable Standard Life to compete for and secure larger corporate pension deals in the UK. The pension risk transfer market has experienced a surge in activity as corporate pension schemes have moved into surplus and higher interest rates have made liabilities more affordable.
Standard Life's chief executive, Andy Briggs, stated that the partnership will allow them to offer a compelling alternative for trustees and sponsors of the largest pension schemes to secure members' pensions. CVC's president, Peter Rutland, highlighted that the deal builds on CVC's existing experience in the UK PRT market.
The increasing interest in the PRT sector has drawn the attention of regulators, including the Bank of England, which has begun to scrutinize funded reinsurance arrangements. This practice, where UK life insurers pay offshore reinsurers to assume pension and annuity risks, is being reviewed due to concerns about potential capital diversion from the domestic economy and under-pricing of capital.