European roundup: Alitalia, Hewitt, EFAMA
EUROPE - Alitalia has announced detals of a buy-in by the Pension Insurance Corporation (PIC), while Hewitt said funding ratios in both the UK and mainland Europe had fallen sharply over the last quarter, and The European Fund and Asset Management Association (EFAMA) announced UCITS had seen strong net outflows in May.
The UK pension scheme for Alitalia, the former state-run Italian airline declared bankrupt in 2008, has agreed a buy-in with the PIC.
Under the agreement, Alitalia Italian Airlines Pension and Assurance Scheme will transfer £53m (€63m) in assets to PIC to secure its current funding position.
The scheme currently faces a £22m deficit.
Miles Buckinghamshire, chairman of the pension fund trustees, said he was “delighted” with the deal.
He added: “It has allowed us to lock down our asset and liability position in volatile markets to the benefit of our members while we continue to vigorously pursue the trustees’ claim in the Italian administration court proceedings in Rome.”
Pension funding ratios in mainland Europe have fallen by 6 percentage points to 66% at the end of the second quarter, according to Hewitt Associates.
The consultancy, which recently announced it would be merging with Aon, said this was a result of falling asset values and an increase in liabilities due to lower bond yields.
Matt Wilmington of the group’s European risk services team predicted the next few months would see a growing interest in enhanced asset-liability matching strategies, as well as longevity hedging.
The UK market also saw a drop in funding ratios across FTSE 350 companies, but only to 82%, down 4 percentage points.
Meanwhile, EFAMA reports that UCITS funds saw a net outflow of €23bn in May.
Both equity and bond funds saw a net outflow for the first time since March last year, of €11bn and €2bn, respectively.
Despite the heavy outflows, the organisation’s monthly fact sheet showed that UCITS net assets made up more than three-quarters of the overall market, with non-UCITS assets only comprising 24%.
Almost one-third of all UCITS assets were invested in equity funds, followed by money market funds with 25% and bond funds rounding out the top three with 23%.
A further 16% were invested in balanced funds, while the remaining 5% were invested in other areas.
Overall, the first five months of this year saw net inflows of €108bn for long-term UCITS, with outflows in this area in May only making up 0.2% of assets.