Life insurer Rothesay Life has agreed a £520 million pensioner-only buy-in with the Cadbury Mondelēz Pension Fund, covering payments for c. 1,900 pensioner members.
The bulk annuity transaction covers a representative subset of the liabilities for pensions already in payment, and will be held as an asset of the pension scheme.
The most recent deal follows a £500 million buy-in in 2009 and is the second tranche of de-risking. Now, c.20% of the scheme is insured of a total £4.6 billion liabilities.
Rothesay Life notes that premium was paid in gilts and cash which is to be reinvested in line with the life insurer’s low-risk, long-term investment strategy.
Sammy Cooper-Smith, Business Development at Rothesay Life, said: “We are delighted that the Trustees of the Cadbury Mondelēz Pension Fund have chosen Rothesay Life to secure its pensioners’ payments. As part of its long-term de-risking strategy we have been working closely with the scheme’s in-house team which has led to a particularly smooth process. We look forward to continue working with them to deliver these members’ benefits.”
Greg Chick, Chairman of the Trustees of the Cadbury Mondelēz Pension Fund, said: “We’re pleased to announce the next step in a long-term de-risking strategy with the purchase of a buy-in policy with Rothesay Life, which provides an important contribution to the trustees’ ongoing objective of reducing risk in the scheme and to increase the security for all members of the fund.
“This is a significant step to de-risk the scheme and our aim is to continue to do so in the future with good partners like Rothesay Life and Aon.”
The Trustee of the Cadbury Mondelēz Pension Fund was advised by the scheme’s in-house team and advised by re/insurance broker Aon and Pinsent Masons, and Rothesay Life by Gowling WLG.
“This transaction is a great example of how patience can pay dividends when setting a long-term strategy. After supporting the Trustee with their first £500m buy-in 10 years ago, we are now helping to provide even greater security to Cadbury Mondelēz Pension Fund members. Being able to articulate very clear objectives to insurers enabled the Trustee to navigate the market and secure a particularly competitive deal,” said John Baines, Partner at Aon.
