Rothesay Life enters into a £115m buy-in with the Western United Group Pension Scheme
21st January 2013
Rothesay Life enters into a £115m buy-in with the Western United Group Pension Scheme, a defined benefit scheme belonging to the Vestey Group, reinforcing its position as a leading insurer in the bulk annuity market for both mid-size and large transactions
Rothesay Life, one of the leading life insurers specialising in providing de-risking solutions to UK defined benefit pension schemes, is pleased to announce that it has entered into a £115 million bulk annuity transaction with the Western United Group Pension Scheme (the “Scheme”), the scheme for current and former employees of the Vestey Group, securing a portion of the liabilities associated with paying pensions to its members.
- The transaction involved an exchange of UK gilts for a bulk annuity insurance policy that provides close matching to the Trustees’ chosen portion of the Scheme’s liabilities
- Since the buy-in policy has been purchased as an investment by the Scheme, the administration and payment of members’ benefits are unaffected by this transaction
- This transaction is a good example of large pension schemes executing mid-market transactions (£100m to £500m) in order to insure a portion of their liabilities, an area in which Rothesay Life has a key focus
Rothesay Life wrote over £1 billion of new bulk annuity business in 2012 and reports a strong pipeline of opportunities, which are expected to produce a flow of new business in 2013 to underpin its appetite for larger, more bespoke transactions.
The Trustees of the Western United Group Pension Scheme were advised by Lane Clark and Peacock (“LCP”).
Addy Loudiadis, CEO, Rothesay Life, said: “This transaction illustrates the trend for defined benefit pension schemes to use their gilts to purchase bulk annuities. For such pension schemes, bulk annuity pricing remains attractive in relative terms because they have been less susceptible to the fall in interest rates than those schemes with a lower allocation to gilts. We are talking to a number of pension schemes about their intentions to follow this trend in 2013.”
Ben Fowler, Group Head of Reward for Vestey Group Ltd, said: “Our decision to enter into the buy-in policy with Rothesay Life is part of the Trustees’ and Company’s long term plan to secure our members’ benefits by investing in assets that match the Scheme’s liabilities. The buy-in executed with Rothesay Life has given us a secure, low risk asset into which we could switch from our relatively highly-valued UK gilts, picking up other protections such as cover against longevity risk and pension increase risk for a portion of the Scheme’s liabilities.”
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About the Western United Group Pension Scheme and its sponsoring employer, the Vestey Group
The Western United Group Pension Scheme is the defined benefit scheme for current and former employees and employers belonging to the Vestey Group. It has around 14,000 members and assets of approximately £500m.
The Vestey Group is part of a fifth generation family business, incorporated in 1895 and 100% owned by the Vestey family. Over the past one hundred-plus years the business has been based on global food production, processing and distribution, as well as shipping and farming. The business today comprises ten food import/ distribution and processing companies that operate as part of the Vestey Foods Group, concentrating on meat, poultry, game, fish, seafood, dairy products and fruit derivatives and turning over approximately £550m per annum.
About Rothesay Life
Rothesay Life was established in 2007 and has become one of the leading providers of regulated insurance solutions in the UK market for pensions de-risking, with over £10 billion of liabilities. In 2012, Rothesay Life wrote over £1 billion of new bulk annuity business.
The strong growth of the business has been achieved through the steady accumulation of pension scheme clients and the acquisition of Paternoster in 2011.
Existing Rothesay Life clients including the pension schemes and their members associated with such names as RSA, British Airways, P&O, Rank, Uniq, General Motors and the MNOPF (Merchant Navy Officer Pension Fund).
Rothesay Life is a secure long term provider of pensions, focused on:
- a flexible and committed approach to execution;
- ongoing risk management to maintain balance sheet strength; and
- robust operational processes.
Rothesay Life is owned by The Goldman Sachs Group Inc, but is separately capitalised under UK insurance regulation. Rothesay Life is authorised and regulated by the UK Financial Services Authority.
LCP is a firm of financial, actuarial and business consultants, specialising in the areas of pensions, investment, insurance and business analytics.
LCP is a leading adviser in the pension buy-in and buy-out market. LCP’s landmark transactions include:
- designing and implementing the first new-style pensioner buy-in for Hunting plc in early 2007;
- providing corporate advice for Cable & Wireless on its £1 billion pensioner buy-in in 2008; and
- being lead advisor to GlaxoSmithKline on its £900 million pensioner buy-in in 2010.
In 2012 LCP acted as lead adviser to five of the ten buy-ins and buy-outs over £100 million, including for the General Motors UK Retirees Pension Plan (£230 million), Tate & Lyle (£347 million), Gartmore (£160 million) and the £115 million buy-in for the Western United Group Pension Scheme.
During 2011, LCP was lead adviser to three of the five largest buy-ins and buy-outs including those for the Uniq plc Pension Scheme and the pension scheme of Home Retail Group.
The firm has more than 500 staff based at locations in London, Winchester, Brussels, Zurich, Basel, Utrecht, Dublin and Abu Dhabi. Please visit www.lcp.uk.com for further information. LCP is part of the Alexander Forbes group of companies, which employs over 4,000 people internationally. For more information on Alexander Forbes and its insurance, risk and financial services, please visit the website at www.alexanderforbes.com
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