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Partnership revisits £100m bond issue via majority shareholder

Partnership has announced a £100m bond issue through a private placing funded by its majority shareholder Cinven Capital Management.

The specialist insurer announced in January it was planning its first bond issuance to help fund a drive to make it less reliant on annuities following the devastating impact of the Budget reforms on the market.

But just one week later, and following meetings with fixed income investors, Partnership announced the plans were not going ahead.

Partnership chief executive Steve Groves says: “Today’s announcement provides us with further financial flexibility as we pursue our strategy to grow the business in the UK retail, defined benefit and US care markets.

“It provides a further cushion against unforeseen market stresses and allows us to pursue the growth opportunities we have identified. As a result, the board believes the bond issue is in the best interests of all shareholders.”

Partnership’s 2014 results, also published today, show it made a pre-tax profit of £24.1m last year, down from £82.7m in 2013.

New business premiums for the year totalled £791m, compared to £1.3bn in 2013.

New business premiums for individual retirement annuities more than halved from £1.1bn in 2013 to £466m in 2014. But new business premiums for defined benefit annuities were up from £84m in 2013 to £247m last year.

Groves says: “Our efforts to develop the market for individually underwritten bulk annuities are now delivering results.”

He adds that Partnership has reduced its operating expenses from £84m in 2013 to £78m in 2014.

He says: “We are now targeting operating expenses of £75m in 2015, representing a £26m reduction against the planned 2015 cost base.”

Partnership says it made 129 job cuts in 2014, reducing its headcount to 427 by the end of the year.

In June, the insurer announced 100 job cuts at its London and Redhill offices.

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