The High Court has blocked the proposed transfer of £12bn of annuities from Prudential to Rothesay Life, the two companies said on Friday (August 16).
In March 2018, Prudential announced its plan to sell £12bn of annuities to derisking expert Rothesay Life, covering 400,000 policies.
But on Friday a High Court judge blocked the sale, otherwise known as a Part VII transfer.
The details were not immediately available but the decision could create questions around other such deals in the annuities market in the future.
In a statement, Prudential said: “We are disappointed by the High Court’s decision. The independent expert, who was appointed to report to the High Court, concluded the transfer would have no material adverse effect on the security of benefits or the reasonable benefit expectations of our policyholders.”
The judgement will not affect policyholders of the annuities and Prudential said it will be writing to them in due course.
The provider also said that the ruling would have no impact on the demerger of M&G Prudential from Prudential, which is expected to complete in the fourth quarter of 2019.
Rothesay Life stated: “The reinsurance transaction agreements contain provisions to address this outcome and whilst it is not the preferred or optimal outcome for either party, it will not have a material impact on Rothesay Life as a whole.
“Rothesay Life and [Prudential] are committed to a long term relationship irrespective of the outcome of the proposed insurance business transfer.”
Rothesay also noted that the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) had not objected to the transfer.
Rothesay Life and Prudential have been granted leave to appeal by the High Court.
Last week (August 14) M&G Prudential announced that it will change its name to M&G following the completion of its demerger later this year but will retain the Prudential brand for its savings business.
This was after in March 2018 M&G Prudential announced plans to demerge its UK and European business M&G Prudential from its Asian business.
The demerger will create two London listed businesses and shareholders will hold shares in both.
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