The transaction is a significant de-risking event for Allied Domecq Pension Fund, where future investment and longevity risks have been transferred to Rothesay Life
UK-based life insurer Rothesay Life has insured £3.8bn ($4.7bn) of defined benefit liabilities for the Allied Domecq Pension Fund.
The policy secures the majority of Allied Domecq Pension Fund’s liabilities and is claimed to be the largest scheme buy-in, incorporating deferred members.
According to Rothesay Life, the transaction is a significant de-risking event for Allied Domecq Pension Fund, where future investment and longevity risks have been transferred to Rothesay Life.
Allied Domecq Pension Fund will continue holding some residual assets to support the ongoing running costs along with payment of pension benefits that are not covered by the policy.
Rothesay Life’s shareholders invested £700m in equity this year
In anticipation of the transaction and further significant opportunities in the defined benefit bulk annuity market, Rothesay Life’s shareholders have contributed another £200m of new equity in addition to the £500m announced earlier this month, taking the total new equity provided this year to £700m.
Rothesay Life business development co-head Sammy Cooper-Smith said: “We are grateful to both the Trustees of the Allied Domecq Pension Fund and Hymans Robertson for their commitment to this project. Together we were able to execute this transaction smoothly and well ahead of schedule. The Fund came to market with clear, well thought through objectives which allowed us to focus on providing tailored solutions for their key requirements.
“This transaction is further evidence that large maturing pension schemes are increasingly looking to secure de-risking opportunities. Rothesay Life’s balance sheet strength, expertise and considerable ongoing shareholder support means that we are a very good insurance partner to the largest pension schemes in the UK.”
Allied Domecq Pension Fund trustees chairman Lisa Arnold said: “This buy-in is a key step on a long journey of de-risking taken by the Fund, with strong support along the way from the sponsoring company. It represents a major achievement, improving security for all our members.
“Hymans Robertson’s insights and experience helped the Fund to navigate a fast-moving bulk annuity market and secure excellent terms with Rothesay Life.”
Earlier this month, Rothesay Life agreed to a buy-out of £4.7bn bulk annuity insurance from telent, a UK radio, telecommunication and internet systems installations and service provider.
The agreement secures the benefits of members, providing certainty and security for the Scheme’s nearly 39,000 members made up of 28,000 pensioners and 11,000 deferred pensioners.