Just Retirement set for mega merger with rival

Steve Groves, chief executive of Partnership, is leaving as part of the deal because the top job is going to Just Retirement’s Rodney Cook.

It is anticipated that the deal will see Just Retirement’s shareholders own about 60 per cent of the new group, with the remaining 40 per cent owned by Partnership Assurance.

Chris Gibson-Smith, chairman of Partnership Assurance, added: “Both businesses have at their core a focus on using outstanding intellectual property and underwriting expertise to deliver better value products and improved customer outcomes within defined benefit, UK retail retirement income and global markets”.

Advisers have welcomed the merger between annuity specialists Partnership and Just Retirement, while cautioning that there is still a lot of work to be done in a challenging market. “Overall, this could turn out to be a good deal for pension schemes”.

Both providers were hit badly by the pension freedom reforms, with annuity sales tumbling following chancellor George Osborne’s Budget speech announcement that “no-one will have to buy an annuity”.

However, he added: “This should not be seen as evidence of the death of annuities though”.

Both Just Retirement and Partnership relied heavily on enhanced annuity business prior to the 2014 Budget. “Investors still show a strong appetite for a secure retirement income for at least some of their pension pot and for those that do shop around on the open market, enhanced annuities now make up over 75 per cent of all transactions”.

“The two companies’ combined share now makes up over 40% of the open market annuity business”.

Shares in Partnership jumped 6.8% to 164.8p on today’s news, while Just Retirement edged 0.3% lower to 198.1p.

He says: “For existing annuity investors, this deal is likely to help dispel any concerns or uncertainty they may have had over the future of their annuity provider and the security of their retirement income”.

The insurers, which were presenting to analysts at Deutsche on Tuesday, say they will raise £150m from the issue of new shares, to give the combined company a market capitalisation of £1.6bn.

Tom Cross Brown, Just Retirement chairman, said: ‘Our two businesses will be bigger, stronger and more efficient together, which we believe will allow us to deliver better returns to both policyholders and shareholders’.