Canada Life Group has announced it has reached an agreement to acquire financial services provider Retirement Advantage.
The terms of the transaction were not disclosed, the company said in a statement today (24 August).
Retirement Advantage has over 30,000 pension and equity release customers, and more than £2bn of assets under management, including a £1.5bn block of in-force annuities.
It was created in 2015 when funds managed by TDR Capital LLP merged the retirement income and equity release divisions of MGM Advantage and Stonehaven.
According to Doug Brown, executive vice-president and chief executive of Canada Life UK, this transaction enhances the provider’s position and broadens its product suite to include equity release mortgages.
Craig Fazzini-Jones, group CEO of Retirement Advantage, said: “This acquisition is a positive endorsement of the business plan we adopted following the UK pension reforms announced in 2014, that transformed our business and drove the creation of innovative retirement solutions.”
He continued: “As we join Canada Life, we will be well positioned to build upon that success and provide greater retirement protection for our customers.”
The transaction is expected to close in the fourth quarter of 2017 and is subject to customary regulatory approvals, and certain closing conditions.
Regulatory approval is likely to take between three and six months, during which time it will be business as usual for the companies and their customer service, the provider said.
According to Nathan Long, senior pension analyst at Hargreaves Lansdown, Retirement Advantage’s retirement income solutions "could get a new lease of life" with Canada Life’s backing.
He said: "Another annuity provider bites the dust, as the impact of the new pension freedoms continues to be felt.
"We have not seen Retirement Advantage offer particularly competitive annuity rates for some time, so whilst we do not expect annuity rates to be impacted in the short term, it is still disappointing that another provider has left the market."
In the long term, "this cannot help competition, something we know the [Financial Conduct Authority] FCA is currently concerned about," he added.
"Annuities still have a huge part to play in retirement and we continue to believe that most people will benefit from some form of secure income like an annuity or final salary pension in retirement to cover any essential spending," he said.
maria.espadinha@ft.com
