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Pension Insurance Corporation seals two more de-risking transactions

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Pension Insurance Corporation (PIC) has insured £261m (€292.5m) worth of liabilities on behalf of two UK pension schemes as the country’s de-risking market heats up.

PIC announced this morning that it had taken on £60m of liabilities from the Civil Aviation Authority’s defined benefit (DB) pension scheme in the latest stage of the fund’s de-risking plan. 

The insurer previously took on roughly £90m from the Civil Aviation Authority – the UK’s air travel industry regulator and operator of air traffic control services – in 2017.

In 2015, the scheme completed a £1.6bn insurance buy-in with Rothesay Life.

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Uzma Nazir, head of origination structuring at PIC, said: “A phased approach to de-risking has become a popular and practical choice for many schemes, due to their relative ease and the speed at which they can be conducted.

“It has been an incredibly busy market so far and we expect this to continue into the second half of the year.”

Paul Belok, partner in Aon’s risk settlement group, which advised on the deal, said the deal fitted with the pension scheme’s policy of “seeking opportunities to de-risk over a period of time, using a phased approach to annuitisation”.

“We monitored a number of key metrics through a quarterly dashboard to determine when the time was right to go to market, and have been able to transact efficiently using previously agreed terms,” he added.

600 Group buyout 

Earlier this month PIC completed a full buyout worth £201m with the DB pension scheme of UK industrial manufacturer 600 Group. 

The buyout meant PIC took on responsibility for paying the benefits of 2,000 pensioners and 800 deferred members.

As the scheme is in surplus, the 600 Group said it expected to receive between £3m and £4m from the scheme once the transaction was completed and the scheme wound up.

Paul Dupee, executive chairman of the 600 Group, said the company and its pensiuon scheme trustees had been working on a buyout “for some time” in order to secure benefits and reduce regulatory constraints on the business.

Insurers and advisers have been talking up the potential of the UK’s de-risking market for some time. 

Earlier this month, consultancy group Hymans Robertson reported that the combined value of buy-ins and buyouts so far this year exceeded the value for the whole year in each year up until 2013.

The company cited “very attractive pricing” from insurers and strong recent equity market performance that has encouraged pension funds to lock in gains.

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