The deal, announced to the London Stock Exchange this morning, values annuity and equity release provider Partnership at £668.5m.
The new business will be led by Just Retirement chief executive Rodney Cook while Partnership’s existing chief executive Steve Groves will leave the company when the merger completes.
The deal follows both companies suffering a hammering following last year’s Budget announcement freeing up pensioners’ access to their life savings.
A joint statement issued to the stock exchange said: “The UK retirement income market has evolved significantly since the 2014 Budget.
“Until this date, as providers of individually underwritten annuities, both Just Retirement and Partnership Assurance were able to achieve fast, profitable growth in the retirement income market by offering customers better value alternatives to the annuity products typically provided by the larger incumbent insurers.
“The 2014 Budget, and the greater freedom for accessing pension savings that it entailed, represented the most fundamental reforms to the retirement income market since the 1920s. These reforms had an immediate impact on the sales of individual annuities, which fell by 42% from £11.9bn in 2013 to £6.9bn in 2014.”
Tom Cross Brown, Just Retirement chairman, said: “Our two businesses will be bigger, stronger and more efficient together, which we believe will allow us to deliver better returns to both policyholders and shareholders.”
JRP Group plans to raise £150m through a new share issue and is targeting cost cutting of £40m a year.
