The transaction, the largest transfer of a non-profit annuity portfolio in the UK, was originally agreed on 11 May 2006.
Under the terms of the transaction, Equitable Life has transferred to Canada Life £4,608 million of assets (as at 1 January 2006), with Canada Life now having assumed responsibility for the future pension payments (with effect from 9 February 2007).
The completion of the transaction removes most of the risk to Equitable Life’s with-profits policyholders of unexpected future increases in non-profit pensioners’ life expectancy, leading to increased costs of paying pensions. At the same time, the transfer has improved the financial stability of the Society and reduced its capital requirements.
Canada Life says the completion of the deal marks a major milestone in its ongoing expansion in the U.K. market and will enable it to benefit from increased economies of scale.
Equitable Life’s chief executive Charles Thomson says:
“I believe that this transaction represents a very good outcome for all the Society’s policyholders. The non-profit annuitants that have moved to Canada Life benefit from being within a financially strong group, which is committed to expanding its operations in the UK market. For our with-profits policyholders, the transaction has removed a significant risk to the level of their future payments.”
Canada Life’s chief executive officer Ian Gilmour says:
“I’m delighted that we have completed the transfer and would like to welcome the 130,000 new policyholders to Canada Life. This is a major step in our continued growth in the UK, bringing our assets under administration for Canada Life and Canada Life International to over £22bn and reinforcing our position as a leading UK provider of annuities, group protection and onshore and offshore investment products.”