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Rothesay Life announces £1.3bn pension buy-in deal with BA's pension scheme

2nd July 2010

Rothesay Life, one of the UK's leading life insurers specialising in providing de-risking solutions to the pension scheme market, today announces the insurance of £1.3bn of pension liabilities of the Airways Pension Scheme, one of the two defined benefit pension schemes sponsored by British Airways. The insurance policy provides cover for some 20% of the pension payments due in respect of Scheme members already in receipt of pension benefits.

The transaction was designed and executed by Rothesay Life, an insurer established in 2007 which has since completed a number of milestone solutions for UK pension schemes. The liabilities are covered by an insurance arrangement issued by Rothesay, under which the trustees retain ownership of the assets backing the transaction, providing significant protection for the Scheme. In return for the proceeds from those assets, Rothesay Life pays the agreed portion of pensioner benefits to the Trustees. This arrangement provides the highest degree of security for the Scheme and its members.

Keith Satchell, Chairman of Rothesay Life, said: "We are delighted to have worked with the Airways Pension Scheme on this solution and that another pension scheme sponsored by a FTSE 100 company has selected Rothesay Life as their preferred insurance provider. I believe this transaction further demonstrates Rothesay Life's expertise in designing and delivering innovative solutions for UK defined benefit pension schemes. Rothesay Life has insured in excess of £3.5bn of pension liabilities in the last twelve months, confirming our leading position in the UK pension scheme buy-out market."

Paul Spencer, Chairman of the Trustees of the Airways Pension Scheme, commented: "The Trustees, working with their appointed advisers conducted a thorough market review process and selected Rothesay Life to deliver a bespoke solution to the Scheme. Our selection was based on the insurer's creativity and structuring abilities, the robustness of the security package underlying the insurance contract an d the execution certainty, which gave us the ability to deliver this solution at a pre-agreed price level."

Paul Kitson, senior consultant at Towers Watson said: "We are delighted to have advised the Trustees of the Airways Pension Scheme and helped in the implementation of a significant risk reduction exercise for the Scheme. The Rothesay Life solution delivered an array of innovative security and execution features and fully satisfied our collective requirements for a transaction of this type."


Rothesay Life

Rothesay Life is an insurance company established in the UK as a wholly-owned subsidiary of Goldman Sachs and is regulated by the FSA.

Rothesay Life aims to provide tailor-made solutions for pension schemes seeking to mitigate their exposure to longevity risk, thereby meeting the requirements of pension scheme members, trustees and corporate sponsors.

Rothesay Life has, since its establishment in 2007, completed a number of milestone transactions for UK based defined benefit schemes:

  • In 2008 it implemented the buy-out of the Rank Pension Plan, a £700m transaction under which all risks associated with the Scheme were transferred to the insurer
  • Following the challenging financial markets of 2009, the insurer delivered the £1.9bn buy-in for the two UK pension schemes of RSA, under which stringent security measures were introduced to achieve a high level of protection for the Schemes and their members
  • In November 2009 Rothesay Life completed the buy-in of the CDC Group pension scheme, a £370m transaction that also introduced a number of innovative security components for the Scheme

Goldman Sachs

The Goldman Sachs Group, Inc. is a leading global financial services firm providing investment banking, securities and investment management services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centres around the world.

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