Boots and L&G strike ‘largest ever single transaction’ pension deal as buy-in flurry continues
Boots has struck a record £4.8bn buy-in deal with L&G today which will see liabilities for the retailer’s pension scheme shifted over to the insurance giant.
The deal announced this morning marks the biggest ever of its kind by premium size and will see L&G take on the liabilities of Boots’ 53,000 pension scheme members.
Legal & General has now written some £13.4bn of global Pension Risk Transfer (PRT) business this year, after a bumper year for the market in which employers have looked to shift risk off their books and onto big insurance firms.
Commenting on the deal today, L&G retirement chief Andrew Kail said he was pleased to have closed its “largest ever single transaction” with a firm that L&G has a two-decade-long relationship with.
“This is testament to our long-standing relationship with the client, and I am proud that we have been able to work seamlessly across our insurance, reinsurance and investment management capabilities to deliver an excellent outcome,” he added.
L&G has provided investment management services to the scheme for over 20 years, and the buy-in begins the conclusion of a de-risking process that the scheme first embarked on in 2001.
Alan Baker Chair of Trustee for Boots pension scheme added the agreement with Legal & General “gives added protection to our members’ long-term benefits by removing market uncertainty and other financial exposures”.
The so-called pension risk transfer (PRT) market has been booming this year as rising interest rates and tricky economic conditions spur firms to shift their pension schemes into the hands of the UK’s insurance behemoths.
At the half year, L&G’s global PRT premiums totalled £5bn. Since then, the Group has completed a further £7.2bn of new business in the UK, and a further $1.5bn in the US.
In all, the firm has struck some £13.4bn of global PRT deals this year.