Pension Insurance Corporation plc (PIC) has announced the completion of a full buyout of all members of the PA Consulting Pension Scheme, covering £850 million of liabilities and roughly 2,400 members.
PIC, a specialist insurer of defined benefit pension funds, wrote a total £3.2 billion of new business in the first six months of 2018 with the trustees of defined benefit pension schemes, which is an increase of 68% when compared with the same period last year.
The £3.2 billion of business written in H1 2018 insured the benefits of 14,000 pension scheme members, and the firm has continued its busy start to the year with a £850 million deal that covers the liabilities of approximately 2,400 members.
According to a statement, the transaction with PA Consulting has a bespoke structure that sees a price lock based on the pension scheme’s asset holdings and other non-standard benefits.
Kully Janjuah of PA Consulting, commented: “We are delighted to have secured this buyout. The Company and our partner The Carlyle Group, have put in significant time and effort to get the Scheme to this position. PIC has been very professional to deal with and has lived up to its strong reputation through innovation, flexibility and great customer service. I would like to thank PIC and our advisers who were instrumental in us reaching this very satisfactory conclusion.”
Head of Business Development at PIC, Mitul Magudia, added: “This is the latest deal in what has been a great start to the year for PIC, with £3.2 billion of premiums written in the first six months and I am happy to say that there is a strong pipeline of business ahead. As things stand, we see it being a record year for the bulk annuity market with more than £20 billion worth of buy-ins and buy-outs expected in total.
“We are really pleased to have been able to provide PA Consulting with an insurance solution that removes both financial and demographic risks. This transaction demonstrates how a joined-up approach to managing pension assets and liabilities can have excellent results. We are delighted to have been able to work as part of a bigger team that was committed from the very start to achieving the best outcome for members.”
PIC was advised on the transaction by Herbert Smith Freehills, and PA Consulting were advised by global insurance and reinsurance broker Aon, who led the structuring and execution of the deal.
John Baines, Partner and Head of Bulk Annuities, Aon, said: “Securing this transaction at a much lower cost than anticipated at the start of this journey is an outstanding result. The innovative structure to integrate member options within an insurance transaction allowed attractive terms to be locked in much more quickly than normal. The ability to achieve this in a Solvency II environment is particularly pleasing and, following a relatively quiet year for large full scheme transactions in 2017, looks set to lead the way for many similar deals in a bumper 2018.”
Janjuah, added: “This project has achieved the outcome we really wanted. By a collaborative approach from all parties, we have been able to secure a deal which no-one imagined possible at the outset. The Aon team has been fully involved in all aspects of the process and we are very pleased at the support and advice that they have provided throughout.”
