Goldman Sachs is seeking to sell a majority share in its leading UK pension risk transfer specialist life insurer, Rothesay Life. A specialist in insuring the risks associated with pension schemes, and as a result involved in transferring longevity risks, Rothesay Life will follow the same route as Goldman’s reinsurer, which it sold a majority stake in April.
Goldman Sachs has said in a filing that it would likely sell a majority holding in Rothesay Life within the next year as it seeks to ensure it meets requirements in new rules for investment banks regarding their activities and equity holdings. Goldman will likely find selling Rothesay relatively easy as the firm has an excellent track record in its niche specialism of pension scheme insurance and risk transfer.
Goldman Sachs sold its reinsurance business Global Atlantic earlier this year as it sought to meet changes in regulation which 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 will likely maintain a reasonable sized share in Rothesay Life, a healthy pipeline in pension risk transfer deals is likely to continue with the concerns in the market regarding longevity risks. It sold 80% of Global Atlantic, largely to private equity investors and institutional firms looking to take a share of a reinsurer. We’d imagine it will hope to achieve a similar distribution of shares in Rothesay Life.
Earlier this year Massachusetts Mutual Life Insurance Company, or MassMutual for short, made an investment in Rothesay Life through a debt offering. A larger version of that transaction could also be on the cards if an insurer wants to take majority control of Rothesay, another possibility.
We’ll update you as and when information on a potential sale becomes available.