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Working closely with financial regulators

Retirement Advantage

After receiving one of the first approvals from the new UK regulators, we were able to complete our acquisition of the new business capability of Marine and General Mutual Life Assurance Society in November 2013.

Description

Retirement Advantage (previously "MGM Advantage") is a specialist in the UK retirement income market. Its market-leading products include guaranteed annuities (“GA”) and The Retirement Account (“TRA”).

A GA product offers a guaranteed, fixed annual income to retirees, and is aimed at people who want security from their retirement income. A better income can be paid compared to traditional annuities as the product takes into account life expectancy, as a result of medical diagnoses or lifestyle factors.

TRA was developed in response to legislative changes and enables retirees to blend certainty and flexibility through the use of guaranteed annuities and income drawdown in one tax-efficient product wrapper.

Transaction

Prior to acquiring Retirement Advantage in November 2013, we had been focusing on the retirement income industry investment theme for several years, believing that the combination of population demographics and regulatory change were underpinning sustained growth in this sector.

Our conviction for Retirement Advantage in particular derived from a number of key attractions, including: a bespoke and undersupplied sector of the UK annuities market which was, at the time of purchase, forecast to grow strongly for at least the following five years; opportunity to significantly improve both the operations and asset management performance of the business; and, significant downside protection from buying a back book of annuities together with a new business platform.

What we’ve done

Shortly after acquiring Retirement Advantage, the UK government announced major changes to tax rules in respect of retirement income that affect the UK annuities market, including Retirement Advantage.

Reacting to this announcement, Retirement Advantage has developed a number of new products for the retirement income market, as well as enhancements to existing products. We have also overseen a substantial reduction in the company’s cost base in order to align the business with the new market environment.

Further information

Date of investment: November 2013
Deal type: Private sale
Status: Unrealised

For further information, email:  retirementadvantage@tdrcapital.com
Visit the company’s website at:  retirementadvantage.com