Partnership Assurance Group plc announces Intention to Float

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, OR THE UNITED STATES

This announcement is an advertisement and not a prospectus and not an offer of securities for sale in any jurisdiction, including in or into the United States, Canada, Japan or Australia. Investors should not purchase or subscribe for any shares referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") expected to be published by the Partnership Assurance Group plc (the "Company" and, together with its subsidiaries, "Partnership" or the "Group") in due course in connection with the admission of its ordinary shares ("Ordinary Shares") to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc (the "London Stock Exchange") (together, "Admission"). A copy of the Prospectus will, following publication, be available from www.Partnership.co.uk. This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction.

For Immediate Release

13 May 2013

Partnership Assurance Group plc announces Intention to Float

Partnership Assurance Group plc, a leading provider of non-standard annuities which offer better terms to customers with medical conditions, today announces its intention to proceed with an Initial Public Offering ("IPO" or "Global Offer") of its Ordinary Shares and to apply for their admission to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange’s main market for listed securities.

The market for non-standard annuities ("NSAs") is the fastest growing segment of the UK annuities market. Partnership has become a leading provider of NSAs through the application of its market-leading proprietary medical and mortality database built up over 18 years (the "Proprietary IP"). Using this Proprietary IP, Partnership is able to offer products that provide a higher income for those retirees suffering from medical or lifestyle conditions and for those managing the rising costs of entering care; these products provide Partnership’s customers with materially higher annuity rates than a standard provider. Through its diversified distribution strategy, Partnership is helping more people to gain access to the benefits of NSAs in the UK.

For the year ended 31 December 2012, the Group generated operating profit of £112m, a 56% per annum increase since 2010.

Partnership highlights

• A business meeting the growing need to offer better products to retirees
  • Partnership wins customers by offering better products than are available elsewhere, since its customers will have shopped around the market for the best annuity rates
  • Since 2006 Partnership has more than tripled its market share to become a leading player in the NSA market, testament to the attractions of its products to retirees
• A 26% share of a large and structurally high growth market
  • The NSA market grew at a 33% CAGR from 2006-2012 to £4.5 billion and is forecast to reach £8.1bn by 2016 (source: Oliver Wyman)
  • 55%-65% of UK retirees are estimated to be eligible for the improved terms of a NSA whereas only 32% purchased one in 2012 (source: Oliver Wyman and ABI)
• Growth and profitability founded upon Proprietary IP
  • Partnership’s Proprietary IP contains over 120 million rating factors, collected over an 18-year period
  • As Partnership has continued to collect more data and strengthen its market advantages, it has leveraged its Proprietary IP to pioneer new products, processes and services
• 2012 results continue high organic growth record
  • FY 2012 new business premiums up 42% to £1.26 billion (2011: £0.89 billion) and FY 2012 Operating Profit up 42% to £112.1 million (2011: £78.7 million)
  • In April 2013, Partnership was ranked the fastest growing private company in the UK for the second consecutive year (source: The Sunday Times PwC Profit Track 100)
• Cash-generative financial profile underpins progressive dividend policy
  • Through the combination of its Proprietary IP and reinsurance arrangements, Partnership is able both to improve the quality of its earnings and self-fund its high growth
  • The Group’s differentiated financial profile enables it to offer investors high levels of growth whilst committing to a progressive dividend policy from IPO
• Experienced Board and senior management team with a track record of delivering profitable growth led by Chief Executive, Steve Groves, and Chairman, Chris Gibson-Smith

Global Offer highlights

• Global Offer to comprise the sale of a portion of Partnership’s existing Ordinary Shares held by funds managed or advised by Cinven Partners LLP ("Cinven") and management (together with Cinven, the "Selling Shareholders") and an issue of new Ordinary Shares by the Group to raise approximately £120 million to achieve a minimum free float of 25%
   
• Proceeds of the Global Offer received by the Company will be used to repay external debt and shareholder loan notes, and for general corporate purposes
   
• Ordinary Shares to be offered in the Global Offer to institutional investors in the UK and elsewhere outside the United States and only to QIBs in the United States in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act 
   

BofA Merrill Lynch and Morgan Stanley have been appointed as joint sponsors and joint global co-ordinators of the Global Offer, with Keefe, Bruyette & Woods and Panmure Gordon & Co acting as co-lead managers. Evercore is financial adviser to the Company.

Commenting on today’s announcement, Chris Gibson-Smith, Chairman of Partnership, said:

"Partnership has developed a new life assurance industry model that puts it among that rare breed of companies with a clear competitive advantage, capable of generating exceptional growth and shareholder returns, by offering a significantly better deal for customers. Partnership is meeting an important need in society to provide an increasing number of people who suffer from serious health and lifestyle conditions higher annuity rates. The IPO is a natural step for Partnership, and the profile generated in the public markets will support its continued growth as the population ages and the potential demand for secure retirement income grows substantially."

Steve Groves, Chief Executive Officer of Partnership, said:

"We set up Partnership in 2005 to use its unrivalled proprietary underwriting capabilities to meet the demands of an exciting growth market. Since then, we’ve grown sales and profits by around 40-50% each year and the IPO represents an important next step for the business. 2012 has been a further year of record financial performance; our sales have shown year-on-year growth of 42% and our operating profits have also increased 42% to £112 million. The drivers behind our growth are sustainable: the shift from defined benefit to defined contribution pensions, ageing demographics, increasing regulatory and consumer awareness of the benefits of shopping around for an annuity, and providing the right product for our customers. For us, this is underpinned by the insight sourced from our proprietary IP and extensive distribution. With penetration of these better value products currently at only about half their potential, there is a clear opportunity for further strong growth in the years ahead."