MGM Advantage has been sold to private equity firm TDR Capital for an undisclosed amount.
An MGM spokesman says the agreement will see a new life company created, with all MGM staff transferred to the new business. TDR will gain the rights to the MGM brand and the provider’s flexible income and enhanced annuity products.
MGM’s mutual society is not included in the deal. It will revert to its former name, The Marine and General Mutual Life Assurance Society, and will close to new business.
As part of the agreement, a £9m goodwill payment will be distributed between 15,000 eligible policyholders. These include investors who hold with-profits policies and anyone who invested in a flexible income annuity before 28 February.
The distribution of the £9m is expected to include a fixed component plus an additional amount that depends on the type of policy investors hold, its value and how long they have held it.
Some £800m of risk linked to MGM’s enhanced annuity business will be transferred away from mutual members to the new life company. This is expected to benefit with-profits policyholders through increased bonuses.
The deal, which is subject to FSA approval, is expected to be finalised later this year.
MGM chief executive Chris Evans says: “This deal is in the best interests of our members and policyholders and will help us continue to grow the business.”
Better Retirement Group director Billy Burrows says: “This must be good news for clients and advisers. With a bigger and secure capital base, MGM will be able to increase its sales of enhanced annuities and hopefully continue developing more innovative annuity products.”