Plus: Isio predicts strong year for mid-sized scheme de-risking, and Norgine seals £28m buy-in with Canada Life.
The scheme set up an “umbrella” de-risking agreement with L&G 10 years ago, allowing it to insure tranches of pensioners at different times.
This week’s announcement marks the 12th such buy-in under the umbrella agreement, with £7bn of liabilities now insured – equivalent to approximately 70% of the scheme’s total liabilities.
Andrew Kail, CEO at Legal & General Retirement Institutional, said the transaction demonstrated that “well-advised pension schemes can achieve great results when they have a deep, collaborative, and trusted relationship with an insurer”.
Clive Wellsteed, partner at Lane Clark & Peacock, which has advised all 12 of the transactions, added: “In a busy market dominated by full buy-ins, this pensioner-only transaction shows how a well-prepared scheme with a de-risked investment strategy can successfully insure benefits over time to achieve its objectives.”
Isio predicts strong second half for mid-sized schemes
The second half of 2024 could be an “attractive environment” for any medium-sized pension schemes considering a bulk annuity transaction, according to consultancy group Isio.
The company said that, while this year may bring a record number of deals, it may not reach the record £50bn of total volume recorded in 2023.
Karen Gainsford, risk settlement director at Isio, said there were plenty of large schemes with more than £1bn in assets seeking an insurance transaction – including some that could surpass RSA’s deal with Pension Insurance Corporation in size.
“However, this means the fate of a handful of schemes will likely drive whether overall volumes continue to grow in 2024 and beyond,” Gainsford said.
“If some of the largest deals do not proceed, we would expect increased competition for mid-sized schemes later this year, particularly with new entrants seeking to establish themselves in the market. This could be great news for schemes who are close to affording insurance. With the right tailoring, schemes of all sizes can get insurer engagement and achieve a successful transaction.”
The number of “jumbo” deals could significantly affect future deal volumes as the insurance market soaks up demand, Isio indicated, but if these large deals do not materialise, there will be significant capacity for smaller transactions.
Pharma firm insures scheme in full buy-in
Norgine, a pharmaceutical company, has insured its pension scheme through a full buy-in with Canada Life.
The transaction was valued at £28m and secured the benefits of 308 members, of which 152 are deferred.
Linda Gilhooly, head of business development for bulk purchase annuities at Canada Life, said the insurer was “developing our capability to meet the growing market demand and enabling schemes and sponsors to secure the long-term future of their members”.
Helen Ross-Smith, risk transfer consultant at Mercer and lead adviser on the deal, highlighted that the trustees were able to run a competitive tender for the buy-in, which she said was a “credit to the trustees’ great governance and robust preparation”.
