Rising rates will boost UK corporate pension deals – Rothesay CEO

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LONDON, Sept 8 (Reuters) – Rising interest rates in Britain will make it easier for company pension schemes to pay the cost of insurance, driving growth in the pension insurance market, said Thursday the new general manager of the insurer Rothesay.

Rothesay and rivals such as Legal & General (LGEN.L) and Pension Insurance Corporation provide defined benefit or final salary pension plans through so-called block annuities.

There are about £2 trillion ($2.31 trillion) of assets in pension schemes.

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The block annuity market has grown in recent years as companies want to offload plans – many of which are loss-making – from their balance sheets.

They usually have to inject more capital into plans before an insurer takes them over.

However, higher interest rates are improving plans’ funding positions, Tom Pearce told Reuters by telephone.

“The number of plans that are now very solvent is extraordinary,” he said.

“We will also see breakthrough individual transactions and unprecedented annual volumes.”

Rothesay secured a bulk annuity of £640m for a pension scheme sponsored by Smiths Group (SMIN.L) earlier this year.

Consultants Hymans Robertson expect block annuity contracts in 2023 to surpass the record high of £44 billion set in 2019. Read more

Rothesay announced Pearce’s appointment as CEO on Thursday. Pearce was previously chief executive of Rothesay and succeeds Addy Loudiadis, who the company said was retiring after 15 years as CEO.

The Pension Insurance Corporation on Thursday reported a sharp rise in its first-half pre-tax profit to 923 million pounds from 10 million a year ago, which it said was due to rising interest rates.

($1 = 0.8657 pounds)

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Reporting by Carolyn Cohn; edited by David Evans

Our standards: The Thomson Reuters Trust Principles.

About Charles D. Goolsby

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