Micro-buyout specialist announces first deal for textile merchant
On the go: A textiles company from Bradford has successfully achieved a buy-in for £9.3m of its defined benefit liabilities with Canada Life after an auction with three bulk annuity insurers.
The transaction with the Carter & Parker Limited Staff Retirement Benefits Plan (1975), sponsored by Thomas B Ramsden and Co, was the first deal secured by K3 Advisory, a specialist consultancy set up in 2018 to help small schemes access the bulk annuity and consolidation market. The scheme’s actuary, H&C Consulting Actuaries, also advised on the deal.
The market for buy-ins and buyouts is expected to set another new record for volumes in 2019, with £17.6bn transacted in the first half of the year alone. However, with intense competition among schemes for pricing and among insurers for assets and staff, some have feared that smaller schemes will begin to be overlooked for deals.
Adam Davis, managing director at K3 Advisory, commented: “Historically, small schemes have not had access to the same resources, and therefore solutions, as their larger counterparts, making their situations much more challenging.
“In this deal, working hand in hand with H&C, we prepared the scheme for the transaction. We then ran an auction process where three market-leading insurers bid for the business. Canada Life was able to offer the best solution.”
K3 confirmed that to attract attention from the three insurers, the scheme prepared data and checked its benefits before going to market, along with making sure it had the right assets to pay a premium. It then conducted a “one-round broking process” involving a target price for the transaction.
Austen Ramsden, managing director of Thomas B Ramsden, said the preparation for the deal “has allowed us to secure pensioner members’ benefits below the level at which we were funding those liabilities, which I consider to be a real result”.