Zurich UK Life has signed an agreement to transfer its legacy portfolio of immediate annuities to Rothesay Life.

Under the terms of the agreement, Zurich UK Life has initially reinsured £1.2bn of annuities to Rothesay Life. Subject to UK Court approval and regulatory consultation, the parties then intend to transfer the annuities to Rothesay Life under a Part VII Transfer.

A Part VII Transfer is a UK legal process under Part VII of the Financial Services and Markets Act 2000 which permits the transfer of insurance business, subject to the approval of the UK Court.

Zurich UK Life has not actively marketed its annuity business since 2005, choosing instead to focus on growing its core business. The insurer said the transaction is in line with its current strategy of actively managing its business for value.

Gary Shaughnessy, CEO of Zurich UK Life said: "Zurich has not been active in the UK annuities market for some time. This transaction protects our customers, reduces our risk exposure and is aligned with our strategy of focusing our resources on pursuing sustained profitable growth.

"Rothesay Life is a specialist in the annuity market and we have followed a rigorous process to ensure we have chosen the right company for our customers".

The transaction takes Rothesay Life’s 2015 new business premium received past £1.7bn for the year to date.

Rothesay Life view

Commenting on the transaction, Rothesay Life chief executive Addy Loudiadis said: "The deal continues an increasing trend of legacy annuity books transferring to specialists such as ourselves. We look forward to completing the transfer and providing Zurich’s policyholders a secure home."

The completion of the Part VII Transfer involves a review process which includes close consultation with the regulators, the appointment of an independent expert to assess the likely impact of the Part VII Transfer on Zurich UK Life’s policyholders and UK Court approval.

Until the effective date of the Part VII Transfer, Zurich UK Life will continue to be responsible for the administration of the annuity policies and policyholders will remain customers of Zurich UK Life.

After the Part VII Transfer is complete, the responsibility for policy administration will pass to Rothesay Life.