Willis Towers Watson has announced a two-tranche, £85 million buy-in deal for the Aliaxis UK Defined Benefit Pension Scheme by London-headquartered Just Group.
Willis Towers Watson advised the Trustees of Aliaxis UK on the buy-in transaction structured across two tranches of pensions in payment.
The initial tranche, worth approximately £35 million, was completed in November 2016. This focused on removing a particular concentration of risk by deploying medical underwriting to insure a small group of the largest liabilities.
A second tranche worth £50 million was completed in December 2017 on a standard underwritten basis and covered the Scheme’s remaining 350 uninsured current pensions in payment.
By structuring the transaction in this way, Willis says a more optimal overall price was able to be achieved and, for the second tranche, allowed the process to move on in a timely manner that suited the Trustees.
Willis Towers Watson commented, “This was a very interesting transaction that required a new approach to secure the best value for the Trustees. Splitting the transaction into two parts allowed us to secure efficiencies for our client in both the process and pricing – and being able to medically underwrite the first transaction secured a further material cost-benefit.”
“The Trustees’ existing relationship with Just meant that they were able to move quickly to secure favourable terms within a short period of time at the end of 2017.”
The Trustees of the Aliaxis UK Defined Benefit Pension Scheme, said, “Following the success of the first buy-in transaction, the Trustees were happy to continue our partnership with Just. The second transaction has further increased the security of our members’ benefits at a price that was very attractive to the Trustees.”
Just Group, added, “The financial benefits of medically underwriting buy-ins is well appreciated, but by splitting this transaction into two the benefits were increased.
“The concentration of risk of the largest liabilities was removed first taking advantage of medical underwriting, and the terms were available for a quick second transaction at a time which suited the trustees and resulted in optimal pricing.”
