Goldman Sachs offloads majority stake in Rothesay Life to Blackstone, GIC

Investment bank Goldman Sachs has announced the sale of a majority stake in its leading UK pension risk transfer specialist life insurer, Rothesay Life. The sale has been expected since August as Goldman Sachs continues to offload insurance and reinsurance business stakes to meet capital rules.

Goldman Sachs has sold a majority stake to a number of investment funds. Funds managed by private equity giant Blackstone and GIC each acquire 28.5% of the shares in Rothesay Life, with Massachusetts Mutual Life Insurance Company acquiring a 7% holding. Goldman Sachs will retain a 36% stake in the specialist pension risk transfer and longevity risk insurer.

Michael Sherwood, Vice Chairman of The Goldman Sachs Group, Inc., commented; “Rothesay Life’s success has now brought it to a size at which it is more capital-efficient for Goldman Sachs to share its ownership with other investors. As a market leader in a dynamic industry, Rothesay Life can continue its growth as a standalone business with the benefit of diversified ownership. We are pleased to remain the largest shareholder alongside three world class investors.”

Details of the transaction have not been revealed and the deals completion is dependent on regulatory approval. The reason for the sale is so that Goldman Sachs can keep on the right side of recent capital rules, such as Basel III, which force large banks to not become too diversified and to keep a focus on core business.

The regulations make it harder, or impossible, for banks the size of Goldman to retain full control of operations which are unrelated. Under Basel III banks have to maintain a certain amount of equity capital in order to be able to meet any losses.

Goldman Sachs also sold an 80% stake in its reinsurance firm, Global Atlantic Financial Group, to institutional and high-net worth inevstors in May.

Earlier this year Massachusetts Mutual Life Insurance Company, or MassMutual for short, made an investment in Rothesay Life through a debt offering, so it’s not surprising to see it extend its share in this deal.