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Paternoster names first client

UK - New bulk annuity buy-out firm Paternoster today announced an initial five pensions outsourcing deals - the first of their sort - with a "substantial" prospect for future deals.

Paternoster, established this year by Prudential's former UK chief executive Mark Wood, will firstly take on the £11.5m in assets and estimated £14m in liabilities of the final salary scheme of underwriting agency Cuthbert Heath.

Wood said that his firm has also bought four other small schemes - all valued at between £10m and £50m - but declined to be more specific as members have not been informed yet of the transactions.

"We have a substantial pipeline currently sponsored by small and medium sized businesses anxious to secure their pension schemes," Wood said.

Paternoster, part of a new breed of insurance firms set up specifically to assume the risks associated with companies' final salary or define benefit schemes, announced in April that it had secured £500m of equity financing from investors including Deutsche Bank.

Wood told BBC Radio 4's Today Programme this morning that current and future pensioners of the schemes now dependent on Paternoster's performance have nothing to worry about, saying: "We have a large amount of capital and we are regulated by the FSA."

Asked by the programme where Paternoster's profit lies, Wood said that saving pension schemes money is also beneficial for his company.

"By bringing together several pension schemes, we can get better deals with asset managers, we can negotiate better terms for the management of the money within the pension fund," also he argued that administration is much cheaper.

Also he said that to match the cash flow that comes from the investments with the pensions that need to be paid the firm tends to invest in bonds.

Commenting on the take-over Graham Pitcher, a director of GP Noble Trustees which oversees the buy-out of the scheme, said that he was confident that the solution offered by Paternoster "delivers the best possible outcome for our pensioners and the remaining members".

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