MGM Advantage has agreed to sell its new business franchise to private equity group TDR Capital, generating a payment of £9m for distribution to eligible members of the mutual society who hold with-profits policies.
A new life company, financed by funds managed by TDR Capital, will continue to focus on the retirement income market trading under the MGM Advantage brand. TDR will acquire MGM's staff, infrastructure, and brand. The deal is still subject to Financial Services Authority approval and a price for the deal has not been disclosed.
As part of the transaction, £800m of annuity business risk will transfer to the new life company, improving the financial strength of the closed mutual.
Chris Evans, MGM Advantage chief executive, said: 'The deal with TDR unlocks the potential in our brand and provides a strong platform to fuel our ambitious plans in the retirement market.
'We are building on a position of strength, having delivered 65% growth in sales in 2012, while assets under administration increased to well over £2 billion.
'This deal is the culmination of an extensive project during which we assessed numerous expressions of interest and a number of other strategic options open to us for the next phase of MGM’s development,' he added.
'It is in the best interests of our members and policyholders and will help us continue to grow the business.'