WTW Pensions Holding, the consultancy’s de-risking vehicle for buyout transactions, has taken over the German pension liabilities of former nuclear energy group Areva, marking its first publicly announced deal since entering the market last year.
Areva fully funded its existing pension obligations in Germany and transferred them to Areva Pensionärsgesellschaft, whose shares were subsequently acquired by WTW Pensions Holding, the consultancy said.
The transaction includes almost all of Areva’s pension liabilities in Germany.
In addition to ongoing pension payments, the company also transferred accrued entitlements of former employees, WTW said in a statement to IPE.
Areva Pensionärsgesellschaft will act as the independent risk carrier for the acquired obligations. WTW will oversee the administration of the existing pension portfolios and asset allocation.
Areva, already a client of WTW, has for several years pursued a strategy to fully outsource its German pension liabilities. The group underwent a corporate restructuring a decade ago, selling nuclear power plant components manufacturer New NP to state-owned French energy group EDF.
“With this transaction, we are demonstrating that our pension buyout structure is not only conceptually sound but also proves its operational strength,” head of retirement at WTW Hanne Borst said.
Managing director of WTW Pensions Holding Johannes Heiniz added: “The full funding of the pension benefits and their transfer to Areva Pensionärsgesellschaft creates clarity, security, and stability for all parties involved.”
WTW said it is in discussions with other companies interested in transferring liabilities via pension corporations (Rentnergesellschaften), the structure commonly used in the German pension buyout market.
The consultancy entered the market last year with a structure comprising a foundation (Stiftung), a pension holding company and a pension corporation (Rentnergesellschaft), supported by a pension trust, a Pensionsfonds and a contractual trust arrangement (CTA).
High funding ratios, strong equity market performance and the current interest rate environment are making buyouts increasingly attractive for German corporates.
Aon has said it expects larger transactions to emerge once the market establishes a track record demonstrating that governance structures for managing buyout assets are sufficiently robust.
