Legal & General has agreed a £151m deal to acquire closed UK annuity buy-out company Lucida.
The acquisition, by L&G’s subsidiary Legal & General Assurance Society, is expected to complete in the third quarter subject to regulatory approval.
Lucida, which closed to new business in November, has £1.4bn of annuity assets and over 31,000 pensions in payment.
L&G says operational and capital synergies will allow it to release £66m of capital and reserves following completion, giving a net acquisition price of around £85m.
It adds further significant capital synergies will follow a corporate restructuring in 2014.
Lucida was founded in 2006 to focus on the bulk purchase annuity market. It implemented bulk annuity arrangements with the Merchant Navy Officers Pension Fund, New Ireland Assurance and the UK pension schemes of Morgan Crucible and Newell Rubbermaid.
L&G managing director of annuities Kerrigan Procter says: “We identified retirement solutions as one of our five themes for growth, and I am delighted today to be able to announce our first acquisition in this arena.
“This acquisition will benefit Lucida’s customers, by providing them with the comfort of knowing their pensions will be paid by a longstanding, trusted and well capitalised business. Legal & General’s annuity business has over 700,000 customers who rely on it for their pension income, and manages over £33bn in assets.”