TIDM37PB
RNS Number : 1659R
Pension Insurance Corporation PLC
27 February 2023
PIC COMPLETES GBP6.5 BILLION BUY-IN WITH
RSA'S UK PENSION SCHEMES
London, 27 February 2023 - Pension Insurance Corporation plc
("PIC"), a specialist insurer of defined benefit pension schemes,
has concluded a buy-in with the Trustees of two schemes sponsored
by RSA Group ("RSA"), the Sal Pension Scheme ("SALPS") and the
Royal Insurance Group Pension Scheme ("RIGPS") (the "Schemes"),
insuring in total c.GBP6.5 billion of liabilities and covering the
pensions of 40,000 members. RSA Group is a wholly owned subsidiary
of Intact Financial Corporation ("Intact" or "IFC").
Highlights:
- Largest ever bulk annuity transaction from pension schemes to
insurer, covering 40,000 members and c.GBP6.5 billion of
liabilities
- Transfers risk from the Schemes to a life insurer specialising
in managing long-term risks, with access to the reinsurance
markets
- Landmark deal which addressed significant issues of timing and
complexity, paving the way for other very large transactions
- Pricing agreed amidst unprecedented market volatility during the LDI crisis
- Improvement in pension scheme funding levels due to rising
gilt yields created a favourable opportunity for the sponsor to
accelerate the Schemes' de-risking, as well as de-risk its own
balance sheet, and for the Trustees to enhance member security
- Transaction facilitated by upfront contribution from Intact of approximately GBP500 million
- Complex structuring considerations included accommodating the
Schemes' existing longevity and asset swaps
- Following full implementation of the transaction, PIC's
solvency ratio would be in excess of 200% on a pro-forma basis,
based on 30 December 2022 market conditions. Further details on
PIC's solvency position will be provided along with PIC's 2022 year
end results in March
PIC's in-house legal team, who worked on all legal aspects of
the transaction for PIC, were advised by CMS Cameron McKenna. Lane
Clark and Peacock ("LCP") advised RSA and Intact on all aspects of
the buy-in process, from whether a transaction might be viable
through to completion. Slaughter and May provided legal advice to
RSA and Intact. Aon and Sackers advised the Trustees of SALPS, and
WTW and DLA Piper advised the Trustee of RIGPS, throughout the
entire transaction process. Penfida provided covenant advice to
both Trustee Boards.
Louis Marcotte, Executive Vice President and Chief Financial
Officer at Intact, said: "The current market environment provides
an excellent opportunity to remove UK pension exposure on IFC's
balance sheet and maintain the security of the benefits of 40,000
RSA UK pension scheme members."
Ray Cox, Chairman of SALPS, and David Smith, Chairman of RIGPS,
said in a joint statement: "We are delighted to have completed this
transaction, securing the pensions for members of both Schemes for
the long term. PIC were flexible in their approach, presenting
innovative solutions to previously intractable problems, as well as
proactively addressing issues which might have derailed the
process. We want to thank the various advisory firms for their
support and hard work in completing this landmark transaction."
Uzma Nazir, Head of Origination Structuring at PIC, said: " We
are proud to have completed an extremely complex bulk annuity deal,
the largest pension scheme to insurer transaction the market has
yet seen. From pricing during the unprecedented volatility of the
LDI crisis in the autumn of last year to structuring the buy-in to
address the issue of asset suitability, this transaction overcame
many of the hurdles that very large pension schemes face as they
accelerate their de-risking plans in light of rising gilt
yields.
"The transaction could only have been completed with strong
teamwork from the Trustees, the sponsor, and their respective
advisors, and I want to thank everyone involved for their
constructive engagement which enabled this positive member
outcome."
- ends -
Notes to Editors:
For further information please contact:
PIC Jeremy Apfel + 44 (0)207 105 2140
apfel@pensioncorporation.com
Apella Advisors for PIC Anthony Silverman +44 (0)7818 036579
PIC@apellaadvisors.com
RSA Anthony Murtagh +44 (0)7469 441622
anthony.murtagh@uk.rsagroup.com
About PIC
The purpose of PIC is to pay the pensions of its current and
future policyholders. PIC provides secure retirement incomes
through comprehensive risk management and excellence in asset and
liability management, as well as exceptional customer service. At
30 June 2022, PIC had insured 293,400 pension scheme members and
had GBP44.1 billion in financial investments, accumulated through
the provision of tailored pension insurance buyouts and buy-ins to
the trustees and sponsors of UK defined benefit pension schemes. To
date, PIC has made total pension payments of almost GBP9 billion to
its policyholders. Clients include FTSE 100 companies,
multinationals and the public sector. PIC is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and Prudential Regulation Authority (FRN 454345).
For further information please visit www.pensioncorporation.com
About Intact Financial Corporation
Intact Financial Corporation (TSX: IFC) is the largest provider
of property and casualty (P&C) insurance in Canada, a leading
provider of global specialty insurance, and, with RSA, a leader in
the U.K. and Ireland. Our business has grown organically and
through acquisitions to over $20 billion of total annual
premiums.
In Canada, Intact distributes insurance under the Intact
Insurance brand through a wide network of brokers, including its
wholly-owned subsidiary BrokerLink, and directly to consumers
through belairdirect. Intact also provides affinity insurance
solutions through the Johnson Affinity Groups.
In the US, Intact Insurance Specialty Solutions provides a range
of specialty insurance products and services through independent
agencies, regional and national brokers, and wholesalers and
managing general agencies.
Outside of North America, the Company provides personal,
commercial and specialty insurance solutions across the U.K.,
Ireland, and Europe through the RSA brands.
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END
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