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L&G completes £261mn of pension risk transfer deals in March

2nd April 2020 - Author: Luke Gallin

UK insurer Legal & General Group plc (L&G) has revealed that its Pension Risk Transfer (PRT) division completed eight transactions over the past month, securing a combined £261 million of pensioners’ benefits during uncertain times.

Legal_&_GeneralThe eight transactions cover UK and U.S. pension schemes and varied in size from as low as £2.2 million to as high as £80 million. L&G notes that on March 27th alone, three separate PRT transactions were signed.

Despite the impacts of the ongoing COVID-19 pandemic, L&G explains that the PRT market in the UK and the U.S. continues to transact, with some of the better prepared schemes making the most of good pricing opportunities.

L&G, like many businesses around the world is now operating remotely, and the insurer states that its PRT team has established practices to enable remote pricing, negotiations, and signing of PRT deals. As the pandemic continues and accelerates in many parts of the world, L&G says that its ability to work in an agile manner puts it a strong position.

Chris DeMarco, Managing Director of UK Pension Risk Transfer, Legal & General Retirement Institutional (LGRI), commented: “Amidst a challenging environment and great uncertainty, today’s announcement demonstrates that despite the significant disruption we are still able to provide security to pension scheme members through risk transfer transactions.

“Recent history demonstrates that periods of market disruption may provide opportunities for schemes to de-risk their schemes. The sharp widening of credit spreads, combined with the strong appreciation in the value of gilts many schemes are holding, has improved buy-in and buyout pricing.

“Legal & General have in place the team and resources to continue servicing our clients remotely as well as meeting demand for further risk transfer transactions. We are pleased that we were able to help these eight new schemes to safeguard their members’ benefits.”

George Palms, President of Legal & General Retirement America (LGRA), said: “Covid-19 poses obvious business continuity and client service challenges; however, in the weeks since its emergence, Legal & General has worked hard to maintain the quality service that our clients expect and continue to support them through their de-risking journeys. The PRT market in the US continues to be active and we look forward to continuing helping plans de-risk over the year ahead.”

These are challenging and uncertain times for many individuals and businesses and as highlighted by L&G, the security of income in retirement is a concern to both existing and future pensioners. The insurer says that its customer service team is also working remotely and continues to service and support scheme members.

Iain Brown, Pensions Partner, EY LLP, added: “Despite the economic uncertainty created by Covid-19 and recent market volatility, we have witnessed resilience in the bulk annuity market with pricing holding up and actually improving. We are still seeing schemes keen to undertake bulk annuity transactions.

“Any practical challenges created by transacting in a “virtual” environment seem to be easily overcome where there is an appetite to be agile for the benefit of the client. This was very much the case in a buy-in recently done with L&G which completed ahead of schedule and, at the same time, secured an excellent outcome for our client’s pension scheme.”

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