Legal & General has completed buy-in with the trustees of two pension schemes sponsored by United Utilities, in a deal that covers around two thirds of their liabilities.
Legal & General (L&G) said the £1.8 billion buy-in had been with two pension schemes sponsored by United Utilities, the United Utilities Pension Scheme and the United Utilities PLC Group of the Electricity Supply Pension Scheme.
L&G said transactions provide the schemes with secure income that would covers around two thirds of their liabilities.
United Utilities is a FTSE-100 listed water supply company; the two schemes are existing clients of L&G, with Legal & General Investment Management (LGIM) having managed a proportion of the schemes’ assets since 1998.
'Busiest year ever'
L&G provided a bespoke price lock to the assets held by the schemes, including the assets held with LGIM. This removed the risk for the trustees of the buy-in price changing relative to the value of the schemes’ assets while the transactions were agreed.
Aon advised the trustees of the schemes while Sackers provided legal advice to the trustees and Mercer acted as the trustees’ strategic investment adviser. The company was advised by LCP and Slaughter and May while Clifford Chance provided legal advice to L&G.
Andrew Kail, chief executive officer, Legal & General Retirement Institutional said the insurer was on track for one of our busiest years ever, and had already written £6.7bn of pension risk transfer business in the UK year-to-date. He added: "We look forward to continuing to support pension schemes throughout their de-risking journeys to reach their desired objectives.”
Gary Dixon, chair of the trustee boards, said: “We’re delighted to have completed this buy-in transaction across our two pension schemes, providing security for all our members and taking a further step on our de-risking journey. The Trustees and Company worked collaboratively throughout the process with excellent support from our advisers Aon, Mercer and Sackers.”
John Baines, partner in Aon’s risk settlement group added: “As a result of a clear strategy, a collaborative approach and meticulous planning, the trustees and company have achieved their highly bespoke transaction objectives. By insuring the majority of liabilities for both Schemes, we helped develop and implement a number of innovative mechanisms to future-proof the transaction, that will result in increased security for all members.”
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