UK - Ex-Prudential executives Isabel Hudson, Mark Duffy and Jay Shah have unveiled a new liability buy-out venture, Synesis Life, with backing from JPMorgan, Royal Bank of Scotland (RBS) and Warburg Pincus.
As a new insurer, Synesis will provide bespoke solutions to the pension and annuity liabilities marketplace, with shareholder base investment allowing it to accept between £7bn and 10bn worth of liabilities transfers over the medium term.
It plans to acquire medium to large annuity portfolios from UK insurance companies and pension funds, although initially it will target insurance annuities as it believes this market segment offers the most immediate opportunities for growth.
David Newbigging, former chairman of Friends Provident, has been appointed chairman.
The UK liability buy-out market has until recently been dominated by insurance big-hitters Legal & General and Prudential. It was joined in April by the Paternoster venture headed up by Mark Wood, another ex-Prudential executive.
While the initial focus will be on companies with mid-sized deficits, Synesis chief executive Hudson told Global Pensions that companies with very large deficits could take advantage of the developing marketplace, no longer dominated by two main players, to begin farming off their liabilities in tranches.
Hudson described the services offered to date as “factory products”.
“Prudential and L&G turn up at a pension fund with a glossy brochure and say this is what we offer. By contrast we turn up with our brains and say ‘lets see what we can structure for you’, because every pension fund has different issues.
“There’s a huge mismatch between supply and demand in the corporate pension fund market. Part of the reason why it has not transacted on any significant volumes to date is because of the view that whatever prices are out there are not proper market prices because you have only ever had L&G and Prudential,” she explained. Further significant growth is planned for Synesis if justified by performance. The venture has been advised by Watson Wyatt and PricewaterhouseCoopers.
By Lisa Haines
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.