The Sedgwick Section of the MMC UK Pension Fund has completed a £1.9bn bulk purchase annuity (BPA) transaction with Standard Life. The sponsoring employer is Marsh McLennan and Mercer, which acted as the lead broker on the transaction, is a business of Marsh McLennan.
The transaction covers the benefits of all 6,500 members of the Section, who were previously employed by Sedgwick Group, acquired by Marsh McLennan in 1998, it was announced.
The buy-in includes novation of the Section’s three existing longevity swaps with Canada Life Re, Munich Re, and The Prudential Insurance Company of America (PICA) from the Guernsey-based insurance captive vehicle, Mercer ICC Limited.
Trustee chair Bruce Rigby said: “We see this bulk annuity transaction as the natural next step and a significant milestone for the Sedgwick Section. The buy-in helps the trustee in continuing to safeguard the financial security of members’ benefits.”
He added that the trustee and Marsh McLennan commissioned a full review of the bulk annuity market and selected Standard Life as the “overall most attractive immediate and long-term partner for the fund’s Sedgwick Section liabilities”.
Kieran Mistry, director of defined benefit solutions at Standard Life, noted: “Executing this complex transaction required a highly collaborative approach between all parties, leveraging the strong relationships between Mercer, Standard Life and the reinsurers.”
Separate teams at Mercer advised the trustee and Marsh McLennan, providing risk transfer, actuarial, investment, insurer financial strength and post-transaction management advice. Linklaters and Herbert Smith Freehills Kramer provided legal advice to the trustee and Marsh McLennan, respectively. Eversheds Sutherland advised Standard Life.
Phil Parkinson, Mercer’s UK investments and retirement leader, said: “Both teams collaborated closely with Standard Life, the reinsurers and the various legal advisers to optimise pricing and terms, maximise efficiency and minimise risk for both the trustee and Marsh McLennan.
“With the new guidance on end-game options, Mercer is working with clients to provide flexibility so they can find the right strategy to suit their individual objectives and situation.”
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