Reinet, the investment company controlled by the Rupert family, is seeing the increasing influence of its investment in UK-based financial services company Pension Insurance Corporation (PensCorp).
Reinet released interim results on Tuesday that showed the value of Reinet’s investment in PensCorp, which services the UK pension retirement market, increased 10% to €1.63bn (about R26.6bn) for the interim period to end-September from €1.48bn in the six months to end-March (when the investment accounted for 30% of intrinsic NAV).
Chair Johann Rupert said the increase in the estimated fair value of PensCorp — it now accounts for 34% of the total Reinet portfolio's intrinsic net asset value (NAV) of €4.75bn (about R77.62bn) — stemmed mainly from an embedded value — which reflected new business written during the period.
He pointed out that PensCorp concluded £6bn (about R114.6bn) of buyouts and buy-ins with the trustees of defined benefit schemes and reinsured £7bn of longevity reinsurance.
Rupert said the longevity reinsurance tally included the reinsurance of almost £1.5bn of deferred (future-pensioner) lives. “This is the first time such a significant amount of deferred lives has been reinsured in any one period and signals increased capacity for this type of risk within the reinsurance market.” Reinet believes this to be positive for the market in general and its investment in Pension Corporation.
Included in the £6bn of new business was a £425m deal with the Co-operative Group, £1.2bn with Dresdner Kleinwort, £900m with Marks & Spencer and £3.4bn in respect of the British American Tobacco (BAT) UK Pension Fund.
Rupert noted that the agreement with the BAT Pension Fund was PensCorp’s largest transaction to date, and took its assets to close to £40bn.
The increased size of the PensCorp investment adds more balance to Reinet’s portfolio, which in previous years was dominated by its minority stake in British American Tobacco (BAT). Reinet’s largest investment is still BAT, which still accounts for about 48% of the intrinsic value of the investment portfolio, but is a far cry from what it was 11 years ago. When Reinet (formed after Rupert family-controlled Richemont and Remgro unbundled their tobacco interests) listed in late 2008, the BAT holding represented about 85% of the portfolio value.
In terms of new investment activity, it was a fairly quiet interim period with Reinet still in the throes of an aggressive share buy-back programme.
The group has already repurchased almost 9.5-million shares between November 2018 and September 2019 at a cost of €135m.
Reinet disclosed new investment commitments of €28m during the interim period with another €38m of investments funded.
Since its formation, Reinet has invested around €2.4bn.
The interim period also saw one significant portfolio disposal with Reinet’s minority stake in Chinese sports brand business Li Ning sold for €28m. A gain of €11m was realised on the sale.
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