Legal and General is to enter the lifetime mortgage market with a proposed acquisition of New Life Home Finance for £5m.
It also has also entered today into a funding agreement to be the sole funder of new lifetime mortgages originated by Newlife. The mortgage funding will provide another source of direct investment assets to back L&G’s annuity liabilities, the group stated.
Newlife was founded in 2003 to manufacture and provide lifetime mortgages. These products are designed to assist homeowners to raise cash against the security of their property while continuing to own and live in their homes.
Subject to Financial Conduct Authority approval, the acquisition by L&G’s retirement division is expected to complete during the first half of 2015.
Bernie Hickman, managing director of L&G’s individual retirement business, said: “Over 60s in the UK have nearly £1,300bn in housing equity and we believe lifetime mortgages will become an increasingly popular way for many people to supplement their retirement income.
“Legal and General’s acquisition of Newlife allows us to participate fully in this market, which we believe has huge potential. With close to £40bn of annuity assets, we have considerable capacity to provide future funding in this growing market.”
Peter Lucas, executive director and co-founder at Newlife Group, added: “With Legal and General’s reputation as a highly regarded customer focused brand and access to their distribution networks, we will be able to help meet the needs of more customers and so become a leader in this growing market.”