UK financial services company Legal & General has completed a £4.4 billion buy-in for British Airways' pension scheme, Airway Pension Scheme, marking the largest to date bulk annuity policy arranged with a UK pension scheme, which also included the conversion of existing longevity insurance into a bulk annuity.
APS covers nearly 22,000 for British Airways and its associated companies.
In September 2017, it established a Guernsey-based captive which protects APS against costs associated with potential increases in life expectancy. It entered into a £1.6 billion transfer of longevity risk using the captive insurance cell in Guernsey.
Legal & General noted there is currently a high level of activity in the UK pension risk transfer (PRT), with Legal & General actively quoting on more than £20 billion, of which more than £7 billion were in exclusive negotiations at the time.
Since then, the company has completed £4.8 billion of UK PRT transactions, including the APS buy-in, and is now actively quoting on £27 billion of UK PRT deals.
“I’m delighted that Legal & General has transacted the largest bulk annuity to date in the UK for British Airways’ pension scheme," said Nigel Wilson, chief executive of Legal & General Group.
"As we indicated at the half year results, the second half of 2018 is likely to be a record six months for our PRT business and we expect to announce further transactions in the next few months. We are actively quoting on £27 billion of UK PRT deals demonstrating the strong demand for insurance, supported by increasing affordability, as trustees seek to improve security for members and companies look to remove legacy liabilities. Legal & General’s combination of longevity and investment management expertise uniquely positions us to deliver at scale, providing solutions that benefit schemes and their members.”
Legal & General, British Airways, Pension risk transfer, Captive, UK