Reinet reaps PensCorp rewards
• Stake in UK-based financial services specialist increases 28% in value and represents about 20% of group’s investment portfolio
Reinet Investments, the investment company controlled and managed by Johann Rupert, continues to build value in its investment in UKbased financial services specialist Pension Insurance Corporation Group.
Reinet Investments, the investment company controlled and managed by Johann Rupert, continues to build value in its investment in UK-based financial services specialist Pension Insurance Corporation Group (PensCorp).
Results for the year to March released this week, showed Reinet’s major stake in unlisted PensCorp, which provides riskmanagement solutions to defined benefit pension funds, increasing in value by 28% to €1.175bn.
The PensCorp investment now represents about 20% of Reinet’s €6bn investment portfolio, which remains anchored by the minority stake in British American Tobacco (BAT), worth €4.25bn or more than 70% of the portfolio.
Rupert reported that in 2016, PensCorp wrote new pension insurance business with premiums of £2.6bn. He said that at the end of 2016, PensCorp had £22.6bn in assets and had insured more than 134,000 pension fund members.
Rupert said that the estimated value of Reinet’s investment in PensCorp took into account the company’s audited embedded value of £2.6bn as well as valuation multiples drawn from industry data and a discount of 10% (which took into account the illiquid nature of Reinet’s investment). In June 2016 Reinet contributed £139m to a £250m capital raise by PensCorp. In November PensCorp raised £250m by issuing subordinated debt.
Rupert believed these proceeds would support PensCorp in writing new business. “Trustees of defined benefit pension funds and corporate decision makers continue to turn to wholesale insurance annuity products to de-risk pension fund and company balance sheets.”
He said PensCorp was well placed to benefit from this expanding market. Reinet declared a dividend of €0.165 per share, slightly ahead of the €0.161 per share paid last year. During the financial year Reinet received £110m in dividends from BAT.
Although Reinet has sold down its stake in BAT in recent years, Rupert said the investment had grown from representing 67% of the portfolio to more than 70% — reflecting the increase in the BAT share price from £40.90 to £53.
Rupert said BAT’s acquisition of the 57.8%, it did not own in rival Reynolds American, coupled with excellent growth across all business metrics and sterling depreciation, contributed to the significant increase in BAT’s share price.
“Although we sold shares in recent years to diversify Reinet’s portfolio, the decision to maintain the position during the year under review has proved to be the correct one.”
Rupert said the past 12 months had seen upheaval in the global political environment, introducing further elements of uncertainty. But he said the overall economic situation in the US, Europe and Asia did seem to be improving. “Together with our partners, we see opportunities in the markets that we invest in and Reinet will continue to invest for the long term, maintaining a prudent approach.”