High Court gives green light to Pru's £12bn annuity sale

High Court gives green light to Pru's £12bn annuity sale

The High Court has approved the transfer of £12bn of annuities from Prudential Assurance Company, now M&G, to Rothesay Life after it was previously blocked.

The High Court ruled yesterday (November 24), that the transfer of the annuity policies can now go ahead.

In March 2018, Prudential announced its plan to sell £12bn of annuities to derisking expert Rothesay Life, covering 400,000 policies.

But in August 2019 a High Court judge blocked the sale, otherwise known as a Part VII transfer, which raised concerns around future such deals in the annuities market.

In December of last year, the Court of Appeal overturned that judgement, forcing the High Court to review the transfer.

The Court of Appeal judges said the High Court had been “wrong” to find there was a material disparity.

They also found the previous court had accorded too much weight to this argument and instead the question should be whether there was a “material adverse effect” on the policyholders. 

A spokesperson from M&G said: “We welcome the High Court’s judgment approving the transfer of annuities to Rothesay with an effective date of December 15, 2021.  

“Those policyholders transferring to Rothesay can rest assured that the terms and conditions of their annuities won’t change as a result of the transfer and they will continue to benefit from equivalent standards of service, management and governance as part of the UK’s largest pensions insurance specialist.”

A statement from Rothesay said: “The Court’s decision has provided important clarity for our whole sector. As the UK's largest pensions insurance specialist, dedicated to providing long-term security and excellent customer service, we are delighted to welcome our new policyholders to Rothesay."

Huw Evans, director general at the Association of British Insurers, said these deals often lead to good outcomes for customers because companies such as Rothesay specialise in looking after annuity customers.

Evans added: “The ABI took part in the appeal to explain the wider consequences for both customers and businesses if a range of speculative discretionary factors could override the view of independent experts and regulators that a transfer can proceed without any detriment to consumers.”

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