UK – Legal & General (L&G) has acquired closed bulk annuity provider Lucida for around £150m (€176m), taking on the company's £1.4bn portfolio of policies.

The sale of the firm, which closed to new business in November last year, has been welcomed as a "positive" outcome for policyholders by consultancy Aon Hewitt, while competitor Towers Watson noted that the deal underlined L&G's "strong appetite" for growing its bulk annuity business.

Kerrigan Procter, managing director of annuities at L&G, said Lucida's acquisition would mean policyholders would be paid by a "longstanding, trusted and well-capitalised business".

L&G said the cash consideration of £151m for the acquisition would be funded from the insurer's surplus capital.

Following the release of £66m in capital and reserves within Lucida, however, the price will fall to around £85m, it said.

It added that the price marked just over half of Lucida's value, estimated at £157m after capital and reserves.

Lucida entered the market in 2006 and de-risked schemes including ceramics and carbon materials manufacturer Morgan Crucible and the Merchant Navy Officers Pension Fund.

For the latter fund, it bought out £600m over the course of two transactions – nearly half of the fund's old section, with the remaining £680m recently subject to a deal with Rothesay Life.

Ian Aley, senior consultant at Towers Watson, said consolidation in the form of a sale followed shortly after Lucida ceased writing further policies, as had been the case with the acquisition of Paternoster by Rothesay Life.

"Lucida had stopped writing new business and was just running off the liabilities it had already taken on," Aley said.

"In that position, it has to make sense to ask whether there could be economies of scale if the fixed costs of running an insurance company and administering pensions are spread more thinly over a larger book of business."

Dominic Grimley, principal consultant at Aon Hewitt, meanwhile noted that the acquisition would bring to a close a period of "tidying-up", with the cessation of business on the part of Lucida, Paternoster, Synesis and ALICO.

Reflecting on Lucida's closure after targeting transactions over £100m during its time, he added: "Lucida, as with some other players, found it hard to price competitively on a consistent basis, and also to establish their credentials without an initial stepping stone of taking on smaller deals."