G4S agrees £1.8bn buy-in deal with Just Group

The deal was concluded in August and is Just’s largest buy-in contract to date, covering 22,500 members.

The buy-in covers “substantively all of its liabilities”, G4S said in its latest annual report, with post-transaction data cleansing ongoing.

G4S stands to receive a refund of any surplus that remains once the scheme is wound up. At the end of last year, the scheme had a surplus of £286m. 

Allan Course, a professional trustee at Capital Cranfield and chair of the G4S scheme’s trustee board, said: “Our focus has always been on ensuring that the promises made to our members are kept, and this buy-in allows us to safeguard those commitments with confidence.

“With thanks to Aon, who skilfully led the process, navigating through the market to reach our goal. The buy-in with Just not only enhances the security for members, but also ensures they receive the care and service they deserve.

“It has been a tremendous effort from all advisers involved, with special thanks to the Aon, Cardano, Gowling and Capita teams in supporting the trustees through the process.”

In a letter to members of the scheme dated September 2024, Course said the trustees had selected Just Group “following a detailed review of the market and having taken impartial advice”.

In a statement to the stock market this morning, Just Group said it had reinsured approximately 60% of the longevity risk attached to the scheme with American National Insurance Company, a subsidiary of Brookfield Wealth Solutions.

‘Material contributions’

Ashley Almanza, executive chairman at G4S, added: “Supporting the members of the pension schemes has always been a key priority for G4S and the company has paid very material contributions into the schemes, on behalf of members, over many years.

“It is extremely pleasing to have worked in close collaboration with the trustees to agree a major buy-in that secures the position of the pension scheme members.”

The G4S Pension Scheme played a key role in its sponsor’s sale a few years ago, when private equity company BC Partners attempted a hostile takeover of G4S in 2020 through one of its portfolio companies, GardaWorld.

During negotiations, BC Partners criticised what it saw as the underfunding of the pension scheme, with GardaWorld later offering a £770m funding package to the trustees.

G4S was later acquired by Allied Universal in 2021, with the trustees securing additional scheme funding worth £344m above what had previously been agreed with G4S. 

Just goes large

This deal is the latest in a string of large buy-ins completed this year, including deals for schemes sponsored by NatWest, Deutsche Bank, the RAC and Michelin.

Just Group has previously focused on the smaller end of the bulk annuity market, insuring multiple sub-£10m schemes over the past two years.

The G4S deal is its biggest single transaction to date. Pretty Sagoo, managing director for defined benefit solutions at Just, said the scheme’s “rigorous selection process” – overseen by Aon and LCP – demonstrated the insurer’s “ability to support larger schemes in their de-risking journeys”.

“There is a vibrant insurance de-risking market for schemes of all sizes and Just are delivering outstanding service to small schemes, large schemes and everything in between,” Sagoo added.

Just wrote £1.9bn worth of new bulk annuity business in the first half of this year from 55 transactions, according to its half-year report – up by more than 30% compared to the same period in 2023. 

The insurer stated in its half-year report: “The drivers behind this momentum remain and we expect a busy second half in 2024, and beyond, as we execute a pipeline of small, medium and larger transactions, while maintaining capital flexibility.”

Further reading

Utmost completes inaugural buy-in deal (13 November 2024)

NatWest insures £11bn through multiple buy-ins (6 November 2024)