UK/EUROPE - Bridge Pointe, a Bermuda-based insurance company, has confirmed its intention to enter the European buyout market and the UK in particular, where officials claim they could expand the market by up to £1bn (€1.12bn) in the next 18 months.
The firm has appointed Francis Fernandes, currently head of European pensions at Citi, to take on the role of managing director and head of European pensions solutions at the company in the summer.
Bridge Pointe said it will be focusing primarily on "buy-ins" for pension schemes, although it suggested the traditional approach needs to be "re-engineered" to link in with funding plans, to target solutions at deferred pensioners.
Kevin Gregson, chief executive and managing partner at Bridge Pointe, said: "Unfavourable demographics and regulation, together with volatile equity and credit markets and changing discount rates have created a perfect storm."
He claimed most companies have been exploring ways to transfer the risks associated with pension schemes and said the recent Budget "will only serve to intensify the demand from finance directors for attractively priced solutions which provide a more certain path or 'bridge' to full insurance buyout".
Bridge Pointe suggested many schemes considering buy-out may not be in the right position at the moment, so the company offering a way for them to get from A to B in a "controlled way".
Trustees will pass the assets to Bridge Pointe, a captive insurer based and licensed in Bermuda, and the firm will then pay the benefits as they fall due through the trustees as in a normal buy-in, however this will only last for a set period - probably between an average of seven to 10 years - at which point the insurer will make a payment back to the trustees allowing them to meet their objective, such as buying out liabilities.
The insurer, which has appointed UBS as its financial adviser for exploring various capital transactions, added its model addresses some of the security concerns trustees may have, as the structure allows each deal to be segregated so that trustees can monitor their particular solvency level and negotiate triggers when they would want to claw back their assets.
Gregson said: "The approach [to buyout] needs to be re-engineered, for example by providing solutions which help link in with current funding plans or by offering solutions targeted more at deferred pensioners."
"We believe a strategy focused primarily on "buy-ins," offering competitive pricing and flexible terms will enable us to expand the capacity of the insured market by as much as £1bn over the next 12-18 months. We believe Bridge Pointe is entering this environment with great timing, a different model, which includes offering a bridge to buyout, and a fresh outlook," he added.
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