The UK’s ICI Pension Fund has completed its fourth buy-in, insuring £630m (€805m) of pensioner liabilities with Scottish Widows – the firm’s largest transaction since entering the market last year.
Heath Mottram, chief executive of the closed fund now sponsored by AkzoNobel, said the transaction marked the end of five months of “significant work” by the board of trustees, building on existing de-risking undertaken.
“The trustee is delighted to add Scottish Widows to its de-risking panel,” Mottram addd, “further enabling it to continue to improve the security of members’ benefits.”
The ICI scheme has now insured liabilities with three different companies – agreeing several transactions in 2014 and last year with Legal & General and Prudential, respectively.
Across all transactions reported to date, the ICI scheme has insured £6.3bn of its £10.3bn in liabilities reported at the end of March last year, leaving it 93% funded.
Emma Watkins, director of bulk annuities at Scottish Widows, said the firm looked forward to becoming a long-term de-risking partner for the fund, which according to its most recent annual report had £9.8bn in assets.
“We have worked closely with the trustee and their advisers to develop a bespoke solution over a number of months and this transaction demonstrates Scottish Widows’ ability to provide innovative de-risking solutions to large pension schemes,” Watkins added.
Clive Wellsteed, partner at consultancy LCP and lead adviser to ICI during the transaction, said ICI now had umbrella contracts in place with all three insurers, allowing the trustee to “react to favourable opportunities” as they arise in the market.
Wellsteed previously said the umbrella contract allowed ICI to insure additional tranches of liabilities when pricing reached a level acceptable to trustees, while limiting the associated workload to areas specific to each tranche.