Standard Life transfers £6.7bn in assets to Canada Life

by Gill Montia

Story link: Standard Life transfers £6.7bn in assets to Canada Life

Standard Life has transferred £6.7 billion worth of the assets that back its annuities, to Canada Life International Reinsurance.

The insurer has been keen to point out that this will make no difference to investors, who will remain customers of Standard Life.

The transfer means that Standard Life no longer carries the risk that its customers may live longer than expected.

As Sandy Crombie, the company’s chief executive, explains: “It substantially reduces pure longevity risk while providing a significant increase to embedded value, a release of cash and a reduction in capital requirements.”

The bulk of the policies being transferred belong to customers who invested in a Standard Life pension policy before it demutualised in 2006, and have taken out an annuity with the company on retirement.

The assets take the form of bonds and cash and Mr Crombie believes the move will create capacity to broaden Standard Life’s product range and “take advantage of the profitable opportunities available to us”.

Transfer agreements of this nature are becoming increasingly common in the insurance sector, with companies such as Canada Life making a profit through managing the underlying assets gained.

However, the Standard Life deal is the biggest transfer to date.