Aviva converts longevity swap as part of £1.3bn RAC buy-in

As part of the transaction, Aviva converted a longevity swap that was initially struck in 2015. This had insured the scheme against improvements in longevity for 10,000 of its members, and was reinsured by SCOR.

The buy-in also involved the transfer of illiquid assets, according to a statement from Aviva – although no details were provided as to the nature of this part of the deal.

While Aviva sold the RAC business to private equity group Carlyle in 2008, the insurer retained responsibility for the defined benefit pension scheme.

Brian Bussell, chair of Aviva Staff Pension Trustee Ltd, said: “We are delighted to have completed this complex transaction covering all the benefits due to members of the RAC (2003) Pension Scheme, providing them with the additional security of a full scheme buy-in.

“The trustee is grateful for the hard work of its advisers and in-house team in getting this transaction over the line.”

Iain Pearce, partner at Hymans Robertson, added: “Transactions of this size inevitably have a number of complexities and we’re delighted to have applied our longevity swap conversion and £1bn-plus transaction expertise to work closely with all parties to smoothly reach this full scheme buy-in.”

Last month, Hymans reported that there were a record number of buy-ins completed in the first half of 2024.

The consultancy reported that 134 such deals were completed in the first six months of the year worth a combined £15.3bn, compared with 96 in the same period in 2023.

Hymans predicted more than 250 buy-ins would be completed this year, which would also be a record for a calendar year. It predicted a total of £40bn of new bulk annuity premiums for the year – down significantly on 2023’s total.