 Pearl Group consists of several life insurance funds which are closed to new business.
The principal funds are Pearl, London Life, NPI, Phoenix, and Scottish Mutual International. The policies offered by these funds include unit-linked policies, annuities and with-profit policies. Today, Pearl Group manages over £56 billion of assets for around 8 million policyholders, making it one of the UK's largest life offices.
Transaction
TDR and Sun Capital Partners, acting through Life Company Investor Group, purchased the closed life insurance businesses of HHG plc in April 2005. In 2008, Pearl took private the FTSE 100 company Resolution plc in a £5.5 billion transaction. In September 2009 Pearl Group Limited reversed into Liberty Acquisition Holdings (International) Company, a Euronext listed company.
Investment Overview
We believed that closed life assurance and pensions schemes generated stable and predictable cashflows, which are generally insensitive to the principal external risks in the industry. However we felt that many "closed" funds were being undervalued both by the application of an unduly high discount rate and as a result of negative market sentiment driven by industry wide mis-selling issues. We thought that there were potential upsides in owning closed book life funds because we believed that they both generally appeared to operate unsophisticated liability and asset management capabilities and failed to take advantage of potential improvements in the administration of the policy holder business.
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