Rothesay Life insures £123m of liabilities for GKN
6 March 2014
Rothesay Life, one of the leading life insurers specialising in providing de-risking solutions to UK defined benefit pension schemes, has insured £123m of legacy pension scheme liabilities for GKN, the FTSE100 engineering firm. The liabilities were insured through a pensioner buy-in.
- The transaction is with the Trustee of the GKN Group Pension Scheme.
- The policy is being held as an investment by the Trustee.
- Administration and payment of members’ benefits are unaffected by this transaction.
The transaction is the first between Rothesay Life and the Trustee of the GKN Group Pension Scheme. It follows the recently announced agreement to acquire MetLife’s £3bn UK bulk annuity portfolio, subject to regulatory approval, and the investment by Rothesay Life’s new shareholders, Blackstone, GIC and MassMutual.
Rothesay Life CEO, Addy Loudiadis, said: “It is our first buy-in of 2014, the first with our new shareholders and our first with GKN, a company with a rich heritage and one of the few original FT30 still in the FTSE100 today.
She continued: “We had a good year in 2013 and expect the de-risking of defined benefit pension schemes to remain high on the corporate agenda in 2014. Buy-ins and buy-outs are core to our growth strategy and we believe Rothesay Life is well placed to benefit from the current demand.”
Rufus Ogilvie Smals, Chairman of the Trustee of the GKN Group Pension Scheme, commented: “The Trustee Directors explored an insurance solution as part of their de-risking strategy and Rothesay Life was selected following a competitive process. This transaction represents an important step towards de-risking the Scheme’s pensioner liabilities.”
Dominic Grimley, Aon Hewitt, said: “This transaction is a key step on the de-risking journey. We were delighted to arrange insurance which is tailored to the needs of the Trustee of the GKN Group Pension Scheme and guide them through the process of securing their members’ benefits.”
For further information please contact:
Temple Bar Advisory Limited +44 (0)20 7002 1080
Alex Child-Villiers or William Barker
Notes to editors
About the GKN Group Pension Scheme
The assets and liabilities in the GKN Group Pension Scheme relate to around 28,000 pensioner and some deferred members following the restructuring of GKN’s pension arrangements at the end of September 2012, when assets and liabilities associated with GKN’s current UK businesses (including all current employees) were transferred to the new GKN Group Pension Scheme 2012.
GKN plc is a global engineering group. It has four divisions; GKN Aerospace, GKN Driveline, GKN Powder Metallurgy and GKN Land Systems, which operate in the aerospace, automotive and land systems markets. Approximately 48,000 people work in GKN companies and joint ventures in more than 30 countries. GKN is listed on the London Stock Exchange (LSE: GKN) and recorded sales of GBP7.6 billion in the year to 31 December 2013.
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 £12 billion of insurance contracts (before the addition of Met Life Assurance). In 2012, Rothesay Life wrote over £1 billion of new bulk annuity business and has since the start of 2013 written nearly £1.8 billion. This strong growth has been achieved through the steady accumulation of pension scheme clients.
Existing Rothesay Life clients include the pension schemes and members associated with such names as RSA, British Airways, P&O, Rank, Uniq, General Motors, the MNOPF (Merchant Navy Officers Pension Fund), InterContinental Hotels and Philips.
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 authorised and regulated by the UK Prudential Regulatory Authority.
About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com
Bulk annuity – An insurance policy through which a pension scheme can secure the retirement income payable to a group of people in exchange for paying a premium to the insurer. In taking out the insurance policy, the pension scheme is purchasing protection against all risks associated with paying defined benefit pensions including longevity, inflation and investment performance risks.
Buy-in – A bulk annuity insurance policy held as an asset of a pension scheme, paying income to the pension scheme that is reference (only for the purposes of calculating the amount of income payable) to an agreed group of members and their benefits. The income from a buy-in benefits all members of the pension scheme, not just those against which it is referenced.
Buy-out – A bulk annuity policy that is structured to convert to a set of individual annuity policies (at the election of the pension scheme’s trustees) following the wind-up of the pension scheme. The individual annuity policies are written in the names of the members against which the bulk annuity policy had been referenced.
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