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L&G completes ninth buy-in transaction with ICI Pension Fund

17th August 2020 - Author: Katie Baker

Legal & General Assurance Society Limited has announced that it has completed a £70 million buy-in with the ICI Pension Fund (ICI).

Legal_&_GeneralICI will be taking advantage of favourable market conditions to secure the benefits of new retirees since its previous transaction with L&G in 2019.

This will be ICI’s ninth transaction with L&G, securing a total of £5.8 billion of liabilities. ICI entered into its firs buy-in arrangement with L&G in 2014, whilst establishing an umbrella contract to facilitate further transactions. This is part of ICI’s long term strategic de-risking plan.

The Trustee was approached by L&G earlier in the year as market volatility presented a favourable pricing opportunity. This umbrella contract structure and the Trustee’s decision making framework meant that ICI could move much quicker in order to take advantage of this.

This collaborative approach and structure had been used for previous transactions to take advantage of favourable market conditions, notably the £750 million buy-in in July 2016, completed within two weeks of the EU referendum result.

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Dominic Moret, Origination & Execution Director, Legal & General Retirement Institutional explained: “We are pleased to be able to continue to support the ICI Pension Fund on its long-term de-risking journey. Today’s announcement adds to a relationship that has already secured a significant proportion of the Fund’s liabilities – larger than any single buy-in transaction in the market.

“This latest transaction demonstrates how an umbrella contract structure and a collaborative working relationship can benefit all parties if trustees are set up to react to favourable pricing opportunities during times of market volatility.”

“We are delighted to have secured our ninth buy-in with Legal & General, and our seventeenth in total, in another transaction for the Fund’s de-risking journey. This latest transaction demonstrates the value of our umbrella contract with Legal & General and highlights what can be achieved by trustees with thorough preparation, the right experienced advisors and a clear decision-making framework,” added Heath Mottram, CEO, ICI Pension Fund.

Clive Wellsteed, Partner and Head of LCP commented: “With the benefit of the umbrella contract and established relationship with Legal & General, the Trustee was able to move quickly to lock in the outstanding pricing available due to volatile markets.

“Having previously used this opportunistic approach to benefit the Fund, including a £750m transaction initiated and completed with Legal & General within two weeks of the EU referendum result in 2016, the Trustee has now insured nearly £9 billion of liabilities through 17 buy-in transactions since 2014.”

The Trustee was advised on the transaction by LCP and Allen & Overy. Legal advice was provided to Legal & General by Eversheds Sutherland.

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