UK retailer Kingfisher has completed the single-largest medically underwritten buy-in to date, insuring nearly £230m (€312m) of risk with Legal & General (L&G).

The policy, purchased by the company’s UK defined benefit (DB) scheme, targeted the “top layer” of its pensioner liabilities, the company said in its 2015 annual report.

“Measured against the long-term funding objective agreed between Kingfisher and the Trustee, the transaction generated a modest funding improvement, as well as a significant reduction in funding risk,” it added.

James Mullins, head of risk transfer solutions at Hymans Robertson, noted that medically underwritten transactions covered £2bn in liabilities in 2015.

“At £228m,” Mullins added, “this is the largest medically underwritten buy-in to date, and Kingfisher becomes the third FTSE 100 company to have completed a medically underwritten buy-in, all of which have been ‘top slice’ transactions, which insure the pensioners with the highest individual liabilities.”

Kingfisher declined to disclose the name of the insurance company issuing the medically underwritten policy, only saying that it was a “major” insurer.

But consultancy Aon’s latest ‘UK Risk Settlement’ report said L&G was behind last year’s largest transaction of £228m, without naming the client. 

L&G’s role in the transaction is noteworthy as the medically underwritten market has traditionally been dominated by providers Just Retirement and Partnership, set to merge in April.

Aon said the medically underwritten market accounted for nearly 30% of the 175 bulk annuity deals completed last year, and 12% of the £12.2bn in policies written – a steep increase from its 5% share of the £13.1bn in policies written in 2014.

Kingfisher closed its UK DB fund in 2012, ahead of the rollout of auto-enrolment.

A focus on de-risking its investments, which saw its annual report disclose a surplus of £246m during the most recent financial year, has seen it hedge more than 80% of its inflation and interest rate risk.

For more on how Kingfisher Pension Scheme invests, read IPE’s recent interview with head of pensions Dermot Courtier and pension investment manager Matt Fuller