Equitable Life is set to offload its 4.6bn book of non-profit pension annuities to Canada Life as part of its ongoing restructuring.No money will change hands but Canada Life will take over responsibility for future pension payments on the 130,000 policies that are being transferred. Policyholders’ payments will be unaffected. Canada Life will reinsure Equitable’s non-profit pension annuity liabilities from January next year until the transfer goes through. The transfer, classed as a part VII transfer under the Financial Services and Markets Act 2000, requires court approval. Application to the court is expected to be made later this year or in 2007. Equitable is keen to offload the book because it says rising longevity is raising the level of reserving required to levels disproportionately risky relative to the size of its free assets. Equitable chairman Vanni Treves says the deal will improve its financial stability and reduce its capital requirements. Letters are being sent to policyholders explaining the implications of the transaction. Treves says: “This is an important development arising from the society’s ongoing review of strategic options. Whether or not further deals are possible, this is a very significant step forward which will increase the financial stability of the society for the benefit of the remaining policyholders.” Canada Life chief executive officer Ian Gilmour says: “This is the biggest acquisition of a non-profit annuity portfolio to have occurred in the UK. This transaction is a major strategic step in our continued expansion in one of our key business areas.”
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