Standard Life gets backing from CVC and Goldman for pension business

Standard Life PLC on Wednesday said it has formed a partnership to expand its UK pension risk transfer business, backed by an initial capital commitment of up to £2 billion over five years.

Standard Life will contribute £500 million of this, with the remainder coming from a consortium of institutional investors that includes CVC Capital Partners PLC, Prudential Financial Inc, Goldman Sachs Group Inc, and MS&AD Insurance Group Holdings Inc. The consortium is led by CVC and the US's Prudential Financial.

Standard Life shares were down 0.3% to 901.50 pence early Thursday in London. The London-based retirement savings provider has a £9.07 billion market capitalisation.

Standard Life said the new partnership, over which it will have full operational control, will enable it to compete for larger and more-complex defined-benefit pension schemes by combining its pension risk transfer expertise with the consortium's private markets origination capabilities and long-term capital.

It expects the partnership to generate "attractive returns" and new fee-based income and to support mid-single-digit annual operating cash generation growth, with only a "minor" near-term impact on its capital and solvency ratios.

"By bringing together our comprehensive PRT capabilities with our partners' specialist private markets capabilities and significant capital resources, coupled with a trusted and well-known brand in Standard Life, we will be able to offer trustees and sponsors for the largest pension schemes an alternative to secure the pensions of their members across the UK," Standard Life Chief Executive Officer Andy Briggs said.

Pension risk transfer agreements allow employers to buy out their future obligations for defined-benefit pensions, transferring the risk of providing member benefits onto an insurance company like Standard Life for a one-time fee.

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