RCS - Rothesay Life PLC - Rothesay Full-Year Trading Update

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21/03/2023 08:15

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RNS Number : 5928T  Rothesay Life PLC  21 March 2023

 

21(st) March 2023

Full-Year Trading Update

Strong capital position means we are well-placed in a pension de-risking
market which has never been more buoyant

 

Rothesay, the UK's largest pensions insurance specialist, today provides an
update on its trading and financial performance for 2022.

 

· New business & market outlook: Rothesay completed de-risking
transactions with nine pension schemes during 2022, resulting in new business
premiums of £3.4bn (2021: £3.0bn). Rothesay now secures the pensions of over
825,000 people. A buoyant bulk annuity market is creating significant
opportunities, with Rothesay currently exclusive on £5.7bn of new business.
The Group continues its disciplined approach to underwriting to ensure returns
from new business are appropriate.

 

· Solvency: Rising interest rates have further contributed to an improvement
in the Group's solvency position, which remains very strong with a Solvency
Capital Requirement (SCR) coverage ratio of 255% at 31(st) December 2022 (269%
on a pro forma basis1) (2021: 226%). Surplus capital of £4.9bn (2021:
£4.6bn) means that Rothesay is well-placed for the significant future growth
opportunities resulting from the positive conditions in the bulk annuity and
pension risk transfer market. Rothesay welcomes the introduction of the new
Solvency UK regime which will facilitate further investment in UK
infrastructure projects and other forms of productive finance.

 

· Risk management: Rothesay's long-term investment in market-leading risk
management systems combined with its comprehensive liquidity risk management
framework, meant that the Group's solvency and liquidity position remained
very strong throughout the significant turbulence in the financial markets in
2022. Rothesay has no direct exposure to Silicon Valley Bank or Signature Bank
and continues to monitor the situation in the US and European banking markets
in line with the Group's long-term investment principles and risk management
strategy.

 

·  Financial performance: The Group generated record operating profits of
£1,016m (2021: £904m) and pre-tax IFRS profits of £170m (2021: £913m).

 

· Assets & liabilities: The Group closely duration matches its assets
and insurance liabilities so the significant increase in long-term interest
rates resulted in the value of both assets and liabilities falling. Assets
under management are now £47.3bn (2021: £62.5bn) and insurance liabilities
reduced by a slightly greater amount to £38.1bn (2021: £54.0bn).

 

· Market consistent embedded value (MCEV): Substantial MCEV gains were
generated from new business and other operating profits. As a result of the
Group's risk management strategy, which is designed to protect its solvency
position in volatile markets, these MCEV gains were offset by the impact of
the significant increase in long-term interest rates combined with an increase
in spreads on corporate and other debt. Rothesay's overall market consistent
embedded value is now £6.4bn (HY2022: £6.5bn; 2021: £7.1bn).

 

·  Credit ratings: Rothesay's credit ratings were upgraded by Moody's
Investors Service and reaffirmed by Fitch Ratings. Rothesay Life Plc is rated
A+ (Strong) for the Fitch Insurer Financial Strength Rating, and is now A2 for
the Moody's Insurance Financial Strength Rating (upgraded from A3). The rating
outlook is stable from both.

 

· Investing in our people: The Group recruited new talent throughout the
year, with employee numbers increasing to 396 (2021: 359). It continues to
have market-leading levels of employee engagement, with 91% of employees
saying they are proud to work at Rothesay.

 

·  Net zero by 2050: The Group is committed to transitioning its investment
portfolio to net zero greenhouse gas emissions by 2050 and to a 20% reduction
in Carbon Intensity by 2025. Rothesay's own operations are now carbon neutral
(a year ahead of target) and the Group achieved a 7% reduction in the
emissions generated by its investment portfolio between 2020 and 2021.
Rothesay has also become a signatory to the Financial Reporting Council's UK
Stewardship Code and now has an MSCI ESG rating of A.

 

·  Excellence in customer service & industry recognition: The Group
continues to deliver industry-leading customer service as recognised by the
Pensions Administration Standards Association (PASA), the independent body
dedicated to improving standards in UK pension administration. Rothesay was
re-accredited with PASA's Gold Standard in May 2022. New initiatives this year
included a partnership with Alzheimer's Society to provide Dementia Friends
training to our people and the introduction of the SignVideo relay service to
support policyholders who are deaf or hard of hearing. Rothesay saw its
performance and market-leading approach recognised in the European Pensions
Awards 2022, where we were named Pensions Insurance Firm of the Year, and in
the Insurance Asset Management Awards, where we were named Insurance Company
of the Year.

 

· LTA partnership: Rothesay has become the exclusive pensions partner to the
LTA, the national governing body of tennis for Great Britain, supporting the
future of British tennis and helping to open up tennis to more people of any
age, ability and background. Rothesay is now the title sponsor of the Rothesay
Summer Series: the Rothesay Open Nottingham, Rothesay Classic Birmingham and
Rothesay International Eastbourne.

 

· The cost of living crisis: During 2022, the Rothesay Foundation partnered
with Iceland Foods to launch the 'Summer Cheer' campaign, giving £2 million
worth of vouchers to pensioners living in need to spend on food and other
essentials. The campaign supported 80,000 pensioners with a £30 voucher and
also provided them with Age UK's information guide on financial advice
following research showing that, despite record levels of poverty, over
770,000 pensioner households are still missing out on Pension Credit payments.

 

Tom Pearce, Chief Executive Officer of Rothesay, said: "Rothesay's strong
capital position combined with our track record of delivering large complex
transactions and strong support from our long-term shareholders, means we are
very well-placed to execute the exciting new business opportunities we are
seeing in a bulk annuity market which has never been more buoyant.

 

At the same time, we will maintain our disciplined approach to underwriting,
our focus on operational excellence, and our continuous investment in our
purpose-built risk management systems. It is this approach which allows us to
deliver excellent financial performance despite turbulent economic conditions,
protecting the future for our policyholders and delivering long-term value for
our shareholders."

 

The Group's solvency metrics as at 31(st) December 2022 are summarised in the
table below:

 

                                  Group  Rothesay Life Plc

                                  £m     £m
 Own funds available to meet SCR  8,066  8,151
 SCR                              3,162  3,162
 Surplus above SCR                4,904  4,989
 Adjusted surplus above SCR(1)    5,149  5,234
 SCR coverage                     255%   258%
 Adjusted SCR coverage(1)         269%   272%

 

 

1 In order to provide flexibility in transitioning assets to our long-term
investment strategy, some Matching Adjustment eligible new business was
written into the non-Matching Adjustment fund. Adjusting for this on a pro
forma basis would increase solvency coverage from 255% to 269%.

 

ENDS

 

Media Contacts

Rothesay: Anthony Marlowe, Head of Communications & Public Affairs

+44 (0)7912 550184 or anthony.marlowe@rothesay.com
(mailto:anthony.marlowe@rothesay.com)

Temple Bar Advisory: Alex Child-Villiers +44 (0)7795 425580, Will Barker +44
(0)7827 960151 or Sam Livingstone +44(0) 7769 655437 or
rothesay@templebaradvisory.com (mailto:rothesay@templebaradvisory.com)

 

Notes to Editors

About Rothesay

Rothesay is the UK's largest pensions insurance specialist, purpose-built to
protect pension schemes and their members' pensions. With over £47 billion of
assets under management, we secure the pensions of more than 825,000 people
and pay out, on average, approximately £200 million in pension payments each
month.

 

Rothesay is dedicated to providing excellence in customer service alongside
prudent underwriting, a conservative investment strategy and the careful
management of risk. We are trusted by the pension schemes of some of the UK's
best known companies to provide pension solutions, including Asda, British
Airways, Cadbury's, the Civil Aviation Authority, National Grid, the Post
Office and telent.

 

Rothesay has two substantial institutional shareholders, GIC and Massachusetts
Mutual Life Insurance Company ("MassMutual"), who provide the company with
long-term support for its growth and development. In September 2020, our
shareholders increased their investment in Rothesay through a transaction
which valued the business at £5.75bn at that time.

 

Rothesay refers to Rothesay Limited and its subsidiaries and is the trading
name for Rothesay Life Plc, an insurance company authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority. Firm Reference Number: 466067. Rothesay Life
Plc is registered in England and Wales with company registration number:
06127279 and registered address: Rothesay Life Plc, The Post Building, 100
Museum Street, London WC1A 1PB. Further information is available at
www.rothesay.com (http://www.rothesay.com)

 

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