Standard Life has insured the Sedgwick Section of the MMC UK Pension Fund in a bulk annuity transaction worth £1.9bn – the insurer’s biggest single deal to date.
The transaction was announced today (6 August) but completed in July. It covers the benefits of all 6,500 members of the section, who were previously employed by Sedgwick Group, an insurance broker acquired by Marsh McLennan in 1998.
Marsh McLennan, the sponsoring employer for the MMC UK Pension Fund, is the parent company of consultancy giant Mercer. Separate teams at Mercer advised the trustee board and Marsh McLennan on risk transfer, actuarial, investment, and insurer financial strength, as well as offering post-transaction management advice.
The deal also included the conversion of three existing longevity swaps with Canada Life Re, Munich Re, and Prudential Insurance Company of America (PICA). Each was completed using a captive insurance vehicle domiciled in Guernsey.
Bruce Rigby, chair of the trustee board, said the bulk annuity transaction was a significant milestone for the scheme, adding: “The buy-in helps the trustee in continuing to safeguard the financial security of members’ benefits.”
Kieran Mistry, director of defined benefit solutions at Standard Life, said executing the transaction required a highly collaborative approach between all parties.
He added: “We are grateful for the commitment and teamwork shown by the trustees, Marsh McLennan, and their advisers throughout the process, and the support of the teams at Canada Life Re, Munich Re, and PICA.”
Linklaters provided legal advice to the trustees while Herbert Smith Freehills Kramer advised Marsh McLennan. Eversheds Sutherland advised Standard Life.
As well as being Standard Life’s biggest single bulk annuity transaction, the Sedgwick deal is also one of the biggest buy-ins announced so far this year.
Car manufacturer Honda insured part of its defined benefit pension scheme with Legal & General in an £800m deal announced last month, while earlier this week National Grid announced the completion of a £900m buy-in with Rothesay.
