The ICI Pension Fund has insured £3.6bn of pensioner liabilities across separate transactions with Legal & General and Prudential today.
The buy-in between the fund (ICIPF) and Legal & General covered £3bn of the pensioner liability – the largest ever bulk annuity policy arranged by a pension scheme in the UK.
ICIPF also secured a buy-in with Prudential for just under £600m as part of a de-risking strategy employed by AzkoNobel, the sponsor of the fund.
The transaction covers around six per cent of ICI’s UK defined benefit pensioner liabilities of circa £10bn.
LCP were the lead advisors on the deal - advising trustees and leading all negotiations with the insurers, including the structuring and execution of the deal.
Towers Watson said 2014 is set to be a record year for the transactions market with the total business written in 2014 to date standing at over £9bn.
“These transactions show that even the largest pension schemes can use the bulk annuity market to materially reduce risk,” Towers Watson senior consultant Ian Aley said.
“We haven’t reached the end of the first quarter of the year and 2014 is already the third largest year to date in this market. You could easily see total transaction volumes of £30bn by the end of the year if conditions remain favourable,” Aley said.
Earlier this month, the Aviva Staff Pension Scheme announced the completion of a £5bn longevity swap, which is the largest UK swap to date.