Our practical approach helped to facilitate this transaction...
The British Airways Plc sponsored Airways Pension Scheme (“APS”), and Legal & General Assurance Society Limited (“Legal & General”) announced today that they have completed a ground-breaking £4.4bn pensioner bulk annuity buy-in which will cover circa 60% of all pensioner liabilities. This is the largest pensioner buy-in completed in the UK market to date and is a significant step in reducing risk in the Scheme.
The transaction accounts for existing longevity reinsurance contracts of circa £1.7 billion that APS entered into via a captive insurer with Canada Life Reinsurance and PartnerRe, which were incorporated into the buy-in arrangement. Following the completion of the £4.4bn buy-in transaction announced today and allowing for previous pensions insurance transactions, APS is now 90% hedged against all longevity risk.
The APS Trustee worked with PwC as lead transaction advisors to identify and secure an attractive buy-in pricing opportunity. Allen & Overy, Eversheds Sutherland and Willis Towers Watson advised the Trustee throughout the process. Legal & General were advised by Clifford Chance.
Virginia Holmes, Chair of the Scheme Trustee, said “This transaction is the latest in a number of insured arrangements entered into by the Airways Pension Scheme. It demonstrates the vision and determination of the Trustee to reduce risk and increase security for members. Today’s announcement is the culmination of much hard work undertaken over several months and we are pleased to be taking this significant step in the Scheme’s de-risking journey.”
Laura Mason, CEO Legal & General Retirement Institutional (LGRI), offered “We are very pleased to have been able to work with the British Airways Pensions team and to have completed this ground-breaking transaction. It is a great example of how Legal & General is helping trustees secure their members’ benefits through our ability to manage complex circumstances and offer flexible solutions.
Today’s transaction was the culmination of a long period of engagement with the Trustee and its team and was the result of many individuals’ collaborative engagement and efforts. We look forward to building on our relationship with the British Airways Pensions team and further supporting them in delivering for the members of APS.”
Tom O’ Sullivan, Canada Life Reinsurance, added “For a Pension Scheme, executing a longevity swap can be an effective first step towards a full risk transfer solution and our practical approach to treaty terms has helped us smoothly facilitate this buy-in transaction.”
About Airways Pension Scheme
The Airways Pension Scheme (“APS”) is a balance of cost, final salary, defined benefit, occupational pension scheme. It was originally established in 1948 and it was closed to new members from 31 March 1984. APS is a mature scheme. As at 31 March 2018, it had 24,196 members, of whom 1.4% were active members, 3.6% deferred members and 95% pensioners. At 31 March 2018 APS had assets of £7.6bn.
About Legal & General
The Legal & General Group, established in 1836, is one of the UK’s leading financial services companies. As at 31 December 2017, we had over 9.5 million customers in the UK for our life assurance, pensions, investments and general insurance plans and over 1 million life insurance customers in the US.
Over fifteen million people worldwide rely on us to help them save for the future and to protect their families and their homes.
About Canada Life Reinsurance
Canada Life Reinsurance offers a range of innovative risk and capital management solutions covering mortality, longevity, health and lapse risks for insurers, reinsurers and pension funds across the U.S. and Europe. To learn more, visit http://www.canadalifere.com
Canada Life is part of a group of companies owned by Great-West Lifeco Inc., an international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses. Great-West Lifeco and its companies have over C$1.4 trillion in consolidated assets under administration as of 30 June 2018 and are members of the Power Financial Corporation group of companies. To learn more, visit greatwestlifeco.com
