Rothesay Life, the specialist insurer of defined benefit pension schemes, has completed a £3.8 billion buy-in deal with the pension fund of the now defunct British drinks group Allied Domecq.
The insurance transaction will secure the majority of the scheme’s liabilities, and is the largest scheme buy-in on record that incorporates deferred members.
The announcement comes just one day after Rothesay Life announced a record £4.7 billion bulk annuity insurance buy-out of the pension scheme of telent, the UK radio, telecommunication, and internet systems installation and services provider.
This latest deal marks a significant de-risking event for the Allied Domecq Pension Fund by passing future investment and longevity risks to Rothesay Life.
Rothesay Life will cover the fund’s liabilities in respect of over 27,000 members of the company, consisting of around 17,000 pensioners and 10,000 deferred pensioners.
The fund will continue to hold some residual assets to support ongoing running costs as well as the payment of any pension benefits that are not covered by the policy.
Allied Domecq Pension Fund was advised by Hymans Robertson and DLA Piper during the transaction process, while Rothesay Life was advised by Linklaters.
Following its most recent transactions, Rothesay Life’s assets now exceed £50 billion, which is more than double the total at year-end 2017 (£24 billion).
Additionally, Rothesay Life’s shareholders have contributed another £200m of new equity on top of the £500m announced earlier this month, taking the total new equity provided in 2019 to £700m.
“We are grateful to both the Trustees of the Allied Domecq Pension Fund and Hymans Robertson for their commitment to this project,” said Sammy Cooper-Smith, Business Development at Rothesay Life.
“Together we were able to execute this transaction smoothly and well ahead of schedule. The Fund came to market with clear, well thought through objectives which allowed us to focus on providing tailored solutions for their key requirements,” he continued.
“This transaction is further evidence that large maturing pension schemes are increasingly looking to secure de-risking opportunities. Rothesay Life’s balance sheet strength, expertise and considerable ongoing shareholder support means that we are a very good insurance partner to the largest pension schemes in the UK.”
Lisa Arnold, Chairman of Trustees of the Allied Domecq Pension Fund, also commented: “This buy-in is a key step on a long journey of de-risking taken by the Fund, with strong support along the way from the sponsoring company.”
“It represents a major achievement, improving security for all our members. Hymans Robertson’s insights and experience helped the Fund to navigate a fast-moving bulk annuity market and secure excellent terms with Rothesay Life.”
Michael Abramson, Partner at Hymans Robertson, further stated: “Hymans Robertson is delighted to have helped the Trustee take this substantial step in improving member security. We worked closely with the Fund to clearly define and achieve its objectives, ultimately helping the Fund to navigate a busy bulk annuity market and lock down terms for £3.8bn of liabilities with Rothesay Life. As the largest buy-in to date covering deferred members, this paves the way for other large schemes to de-risk.”
Finally, Cédric Ramat, EVP Human Resources, Sustainability and Responsibility at Pernod Ricard, which acquired Allied Domecq in 2005, commented on the deal.
“Pernod Ricard is very pleased that the Trustee of the Allied Domecq Pension Fund has been able to conclude this buy-in with Rothesay Life,” Ramat said.
“This transaction reduces the Group’s exposure to long-term risks associated with the Fund and is a significant milestone in the journey to secure the benefits earned by the Group’s employees and former employees as members of the Allied Domecq Pension Fund.”











