BRITISH insurers are sitting on a £120bn pile of annuity business that is waiting to be plundered by pension fund buyout companies, according to Isabel Hudson, chief executive of Synesis Life, the market's newest entrant, reports the Times.
Hudson, formerly a distribution director at Prudential, tells the paper the value of annuities being paid out by UK life insurers was growing by as much as £10bn a year.
It says an increasing number of insurers are keen to offload their annuity business — as demonstrated last month by the sale of Equitable Life’s £4.6 billion book of annuities to Canada Life — because the business made the investment and capital requirements of their with-profits funds more complex, she said. “There’s a huge amount of money swashing around, but not that much talent,” she said.
In 2004 the Oxford graduate oversaw the Pru’s purchase of £1.1 billion of annuity liabilities from Royal London and a £1.5 billion annuity deal with Resolution a year later.
With Jay Shah and Mark Duffy, two colleagues who worked on the deals, Hudson quit Prudential to take advantage of what she believed would be a burgeoning market in unwanted annuities.
Synesis is approaching insurers and is close to receiving approval from the Financial Services Authority (FSA), but Hudson said that she had no timetable. “We’re looking at transactions of £1 billion-plus and, certainly, those below £100 million don’t really fit our skillset,” she said.
Although Synesis initially will concentrate on insurers’ annuity books, Hudson said that later it would go into buying occupational pension schemes. The insurer is in talks with JPMorgan, the investment bank, about a joint solution to help companies to better manage their pensions liabilities. JPMorgan could offer liability-driven investment (LDI) plans to cover a company’s promises to its existing and deferred pension fund members, while Synesis bought the pensions currently in payment to retired members.
THE Bank of England (BoE) yesterday said it had agreed a £75m settlement with liquidators for the collapsed Bank of Credit and Commerce International as part of the failed action brought against the central bank, reports the Scotsman.
The BoE said on Wednesday it would retain £73.6m paid to it by the liquidators in November 2005, plus £1.7m of interest on that amount. The final settlement is a little short of the £80m that lawyers for the BoE had sought in costs from the liquidators in the marathon case, reports the paper.
Deloitte, liquidators for BCCI, dropped an £850m lawsuit in November, ending the first case ever brought against the central bank after almost two years in court and 12 years of litigation.
Lawyers for Deloitte had alleged that the BoE knowingly failed to protect depositors from the world's biggest bank fraud, which resulted in the spectacular collapse of BCCI in 1991, owing more than $16 billion (£8.6bn). The case was thrown out by the High Court.IFAonline
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