UK - Pensions buyout firm Paternoster is set to remain withdrawn from the market for the time being, according to chief Executive Ed Jervis, as market conditions are still insufficient to make the move worthwhile.

"We are not engaged in any discussions with the FSA (Financial Services Authority) with a view to starting new business," Jervis told IPE.

"We do get asked to give indications of price[to companies with pension schemes], but we make it very clear when we do that, that it is not with regard to transacting," said Jervis. "We are closed to new business until such time as we have got new capital."

The firm announced at the end of September that its shareholders would inject £5m of new capital. The cash was provided, Paternoster said at the time, in order to "ensure that the company retains the capability to write new business once it has raised further money or when there is significant improvement in the economic outlook and only once the company and FSA have agreed it is appropriate to do so".

The new money had been working capital and not risk capital that would allow it take on new business, Jervis explained.

"At the moment, we're managing our existing commitments to our policyholders. At some point in the future we would look to get more capital and do new business, but that is not where we are now," he said.

A UK newspaper earlier this week claimed the Paternoster chief executive was in discussions with the financial watchdog about writing new business, putting an end to the firm's self-imposed exile from the market which earlier required it to alter its FSA status.

Back in the spring, the Paternoster board concluded that the firm was no longer in a position to take on new business, and then asked the FSA for a voluntary variation of its permissions. Even though this was initiated by the company itself rather than the regulator, Paternoster would still need the agreement of the FSA in order to begin writing new buyout business.

Buyout business activity tailed off significantly for all providers in 2009, with the fall-off in deals sparked by the collapse of Lehman Brothers in September 2008. In the wake of that event, buyout providers suffered from an inability to access sufficient capital, which left them unable to take on new business.

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