Equitable Life is to transfer its annuity business, worth about £875m, to Canada Life.
The deal, which involves the off-loading of 31,000 annuities, is expected to complete by the end of 2015.
Equitable Life says the transfer will allow it to free up capital to benefit its with-profits customers. It says capital had to be held against the annuity business because the run-off of its annuity book is much longer than its with-profits products.
As a result, all but the the longest-surviving with-profits customers suffered from a lack of capital, Equitable says.
Canada Life has not paid any money for the book of business.
Equitable Life chief executive Chris Wiscarson says: “This transfer is one more important step in releasing capital for distribution to our with-profits policyholders.”
Canada Life chief executive Douglas Brown says: “We are delighted to announce this transaction with Equitable Life. We are committed to delivering excellent service to all our policyholders, and we look forward to welcoming the transferring annuitants to our company.”
Canada Life already provides over 400,000 annuities. Last month, Canada Life acquired L&G’s offshore business.