24th Jun 2005 07:00
Prudential PLC24 June 2005 EMBARGO: 07.00 hours, Friday 24 June 2005 PRUDENTIAL TO ACQUIRE PHOENIX LIFE & PENSIONS LIMITED'S ANNUITIES BOOK Prudential and Resolution Life Group announced today that they have reachedagreement for Prudential to acquire the portfolio of in-force pension annuitieswritten in the with-profits fund of Resolution Life's subsidiary, Phoenix Life &Pensions Limited (PLP). The book covers approximately 52,500 policies (weightedaverage age 73 with no deferred annuities) with assets of approximately £1.5billion. The transaction is expected to generate premium income of around £145million on an APE basis but the final number will only be known once variouspremium adjustments have been made over the course of the next six months. PLP (previously known as Royal & Sun Alliance Life and Pensions Limited) wasacquired by Resolution Life Group from Royal & Sun Alliance in September 2004. Under the terms of the agreement, Prudential will initially provide reassuranceto PLP which will continue to pay the annuitants, with Prudential reimbursingthe annuity payments to PLP. In due course, the intention is for the PLP book totransfer to Prudential under a Part VII scheme, at which point Prudential willtake over direct responsibility for the payment of all annuitants. Thistransaction will not affect the terms of the annuity payments made to PLP'scustomers. Mark Wood, Chief Executive, Prudential UK & Europe, said: "Prudential is amarket leader in annuities paying almost one million people each month. As aresult of this transaction, PLP's annuitants will benefit from Prudential's vastexperience in this market." The capital required for this transaction will not alter the capital requirementfor Prudential UK over the planning period of 2005 - 2007. -ENDS- Enquiries to: Media Investors/Analysts Prudential GroupClare Staley 020 7548 3719 James Matthews 020 7548 3561 Marina Novis 020 7548 3511Prudential UKAnthony Frost 020 7150 3001 Resolution LifeIan Maidens 020 7489 4880Alex Child-Villiers 07795 425580Temple Bar Advisory Notes to Editors: 1. Prudential is a leading life and pensions provider to approximately 7 million customers in the United Kingdom. It has around 6,800 full-time staff, offices located in London, Reading, Belfast, Dublin and Stirling, and a customer service centre in Mumbai. Products: Bulk and Individual Annuities, Corporate Pensions, With-Profits andUnit-Linked Bonds, Savings and Investments, Equity Release, Healthcare andProtection. Distribution Channels: Direct to customers (telephone, internet and mail),Independent Financial Advisers, Business to Business (consulting actuaries andbenefit advisers), and Partnerships (affinities and banks). 2. The UK annuity market has been one of the key drivers of the overall life market during recent years. The annuity market has been a particular area of focus in Prudential's UK strategy in recent years and today, Prudential is a leading provider of individual and bulk annuities in the UK. Prudential has a large source of annuity business through maturing pensions inits with-profits fund which, until recently, has been written in Prudential'swith-profits fund. However, Prudential now writes this business in itsshareholder-backed business, Prudential Retirement Income Limited. In addition, shareholder capital is used to support the annuity businesswritten on behalf of other insurers. The agreements with Zurich FinancialServices, Pearl Assurance, St James' Place, Royal London and National AustraliaBank highlight Prudential's capabilities in this area. Shareholder capital isalso used to back individual annuities obtained through customers from otherinsurers exercising their Open Market Options. 3. The mortality basis used to price this transaction is based on the current Prudential view of annuitant mortality, adjusted for any known differences in the PLP portfolio based on the book's mortality experience. 4. Details of PLP book: Total number of policies Approximately 52,500% of policies male/female 65%/35%Average age (weighted by benefit amount) 73.1Average age (unweighted) 72.7Annual Payments (first life) £106 million 5. Resolution Life Group has recently announced that it plans to merge with Britannic Group Plc (Britannic) to form the UK's leading consolidator of closed life funds. The merger is due to be completed in Q3 2005, subject to the approval of Britannic's shareholders, and the required regulatory clearances. 6. Prudential (through M&G Investment Management) will have a 6.3 per cent shareholding in Resolution Plc following the merger with Britannic. Prudential plc, a company incorporated and with its principal place of businessin the United Kingdom, and its affiliated companies constitute one of theworld's leading financial services groups. It provides insurance and financialservices directly and through its subsidiaries and affiliates throughout theworld. It has been in existence for over 150 years and has £187bn in assetsunder management, as at 31 December 2004. Prudential plc is not affiliated inany manner with Prudential Financial, Inc, a company whose principal place ofbusiness is in the United States of America. Forward-Looking Statements This statement may contain certain "forward-looking statements" with respect tocertain of Prudential's plans and its current goals and expectations relating toits future financial condition, performance, results, strategy and objectives.Statements containing the words "believes", "intends", "expects", "plans", "seeks" and "anticipates", and words of similar meaning, are forward-looking. Bytheir nature, all forward-looking statements involve risk and uncertaintybecause they relate to future events and circumstances which are beyondPrudential's control including among other things, UK domestic and globaleconomic and business conditions, market related risks such as fluctuations ininterest rates and exchange rates, and the performance of financial marketsgenerally; the policies and actions of regulatory authorities, the impact ofcompetition, inflation, and deflation; experience in particular with regard tomortality and morbidity trends, lapse rates and policy renewal rates; thetiming, impact and other uncertainties of future acquisitions or combinationswithin relevant industries; and the impact of changes in capital, solvency oraccounting standards, and tax and other legislation and regulations in thejurisdictions in which Prudential and its affiliates operate. This may forexample result in changes to assumptions used for determining results ofoperations or re-estimations of reserves for future policy benefits. As aresult, Prudential's actual future financial condition, performance and resultsmay differ materially from the plans, goals, and expectations set forth inPrudential's forward-looking statements. Prudential undertakes no obligation toupdate the forward-looking statements contained in this statement or any otherforward-looking statements it may make. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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