Goldman Sachs Group Inc. (GS:US) is in talks to sell a majority stake in its European insurance business to Singapore’s GIC Pte and Blackstone (BX:US) Group LP, according to a person with knowledge of the transaction.
Both GIC, Singapore’s sovereign wealth fund, and Blackstone, the world’s biggest private-equity firm, may each buy a stake of about 30 percent in Rothesay Life Ltd., a London-based insurer run by Goldman Sachs partner Addy Loudiadis, said the person, who asked not to be identified because the negotiations are private. Massachusetts Mutual Life Insurance Co. may also buy 6 percent, the person said.
Goldman Sachs said last month that it expects to sell a majority stake in Rothesay, which has about $9.66 billion in assets, in the next 12 months as banks face more stringent capital rules. Goldman Sachs sold about 80 percent of Global Atlantic Financial Group, a reinsurance business in Bermuda, to institutions and high-net worth clients this year.
The Financial Times reported earlier today that Goldman Sachs was set to sell almost two-thirds of the pensions insurer to GIC, Blackstone and Mass. Mutual. Spokesmen for Goldman Sachs, Rothesay, GIC and Blackstone declined to comment. A spokesman for Mass. Mutual, based in Springfield, Massachusetts, couldn’t be reached outside of normal business hours.
Mass. Mutual invested 100 million pounds ($156 million) in subordinated debt in Rothesay this year. The transaction is some way off from being completed, with an announcement unlikely before the end of September, the person said.
Rothesay insures about 12 billion pounds of insurance contracts for companies including IAG SA’s British Airways and General Motors Co. (GM:US)’s U.K. division. Firms such as Rothesay promise to pay pensions if retirees live beyond a certain age and then use derivatives to try to hedge the risk. The insurer typically receives a portion of the pension plan’s assets.
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