Equitable Life, the troubled life insurer, finally offloaded its £4.6bn non-profit annuity book yesterday, passing it on to Canada Life at no cost to the business.
The transfer represents a good deal for Equitable, which was expected to have to pay a premium to offload the book.
However, the chief executive Charles Thomson said a keen auction for the book had allowed it to pass on the assets - which make up about 130,000 policies - at no extra cost.
The transfer is expected to take up to 18 months to complete, because of the complex structure of Equitable's business. Although Equitable will continue to administer the policies initially - with Canada Life merely acting as a reinsurer - the Canadian insurance group will eventually take over the administration of the book as well.
Mr Thomson could not disguise his delight as he announced the deal, saying it represented a major landmark for the group. He said the deal made sense for both parties. "They can do more with the book assets than we can," he said. "They can increase the investment yield and make much more out of the assets."
Although Mr Thomson confirmed the group would continue to look for ways of raising policyholder value, including a disposal of the rest of the business, he said it was less likely any further transactions would take place before the completion of the Canada Life deal. Asked about his future, Mr Thomson hinted he may consider an exit from Equitable.
A sale of the group's closed with-profits fund is likely to prove difficult because of the group's mutual structure and the fact that it has long-term administration and asset management contracts in place with HBOS.Reuse content