UK - Paternoster has completed the first buyout of a FTSE 100 company after it agreed a deal with the mining company Lonmin.
Members of the Lonmin Superannuation Scheme (LSS), which had assets valued at $135m (€87.1m) at the end of September 2007, have already been informed by trustees their retirement benefits have been secured with Paternoster.
Lonmin operates a number of defined contribution (DC) schemes, but the UK-based LSS was its only DB scheme, which was the best funded pension scheme in the FTSE 100 with a 118% funding level, according to a report by Pension Capital Strategies (PCS) in January.
James Scott, chairman of the trustees of the LSS, said the scheme had chosen Paternoster following a "full tender exercise" which the insurer won based on its previous experience in taking over similar pension funds.
He added: "Securing member benefits with an insurer means that the scheme fully covers its liability to pay the pensions and is no longer subject to risks relating to investments or members living longer than expected."
Andrew Dawson, director of Gissings Consultancy Services, which advised the trustees on the agreement alongside Lovells, said the trustee board had been "keen to find ways to ensure the security of members' benefits" and revealed the "buyout of the remaining liabilities is the final stage in securing these".
Lonmin bought out its SUITS pension scheme in 2004 - SUITS was the holding company of the former UK activities of the old Lonrho group which was finally sold in 1997 - when it wound up the fund and secured members benefits with an annuity purchase n a deal valued at $42m.
Confirmation of the deal follows a buyout report by Lane Clark & Peacock (LCP) last week predicting the first FTSE 100 buyout was "imminent" as its research had revealed at least 10 FTSE 100 companies had received quotes from buyout firms. (See earlier IPE story: Buyout market to pass £10bn in 2008)
Although the exact value of the deal is unclear, the transaction adds to expectation that the market will pass £10bn of business by the end of 2008, as according to Aon the figure for the first three months of 2008 was £2.2bn. (See earlier IPE story: Credit crunch boosts buyout market)
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