Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension funds, has concluded a third pension insurance buy-in with the Trustee of the British American Tobacco UK Pension Fund, insuring approximately £250 million of liabilities.
With the completion of this deal, PIC has now insured all £4.1 billion of the Fund’s liabilities, covering the pensions of all 10,000 members.
The first buy-in was completed in May 2019 and the second in 2021, with this final buy-in completed in October 2022.
The latest buy-in means the Fund is the largest pension scheme in the UK to have insured all its liabilities through a series of buy-ins phased over time.
“This transaction underlines the excellent relationship formed between the Fund, its advisers, and PIC. This relationship has been fostered over the last four years, since our initial transaction in May 2019,” said Mitul Magudia, Head of Business Development at PIC.
“These three linked transactions have moved the market forward in respect of what is possible in the risk transfer market. We expect the approach taken here to form a template for a number of large schemes currently preparing to move to insurance.”
Graeme Munro, Chairman of the British American Tobacco UK Pension Fund, also commented: “After many years of de-risking the Fund we are pleased to have reached a major milestone of having all our liabilities insured with PIC. This is another step towards the Trustee’s objective of increasing the security of members’ benefits and reducing risk.”
The Trustee was advised during the process by LCP, who also acted as lead adviser for all transactions. Linklaters provided legal advice to the Trustee, and Hymans Robertson is the Scheme Actuary. PIC was advised by Herbert Smith Freehills.
