UK – The legacy fund of record producer EMI has completed the UK's largest single bulk annuity deal to date, transferring £1.5bn (€1.7bn) of liabilities to the Pension Insurance Corporation (PIC).
Swapnil Katkar, a member of Citibank's pension solutions team, said the disciplined process undertaken by the scheme sponsor allowed all risks to be covered on "competitive terms".
The US bank became the EMI Group Pension Fund's sponsor after the partial sale of EMI's business last year, following on from its seizure of the record company from private equity company Terra Firma in 2011.
Trustee chairman Clive Gilchrist of BESTrustees said members had been contacted and made aware of the agreement with PIC.
"As a trustee, fully securing benefits is the ultimate goal," he said.
"An enormous amount of time and effort has been put into this by all concerned. The outcome demonstrates how worthwhile it has been."
Citi was advised by law firm Clifford Chance and Mercer, the trustee by Premier Pensions Management, Sacker & Partners and Towers Watson, while PIC was advised by Herbert Smith.
The £1.5bn transaction was the largest since Legal & General insured £1.1bn of liabilities from the T&N retirement benefit scheme in an effort to stave off entry into the Pension Protection Fund.
Dominic Grimley, actuary at Aon Hewitt, said he welcomed "yet another fillip" to the bulk annuity market.
"The landmark deal follows a strong Q1 for placements and positive news for investors in the market, including the well-received Partnership public offering and the acquisition of Lucia policyholders' liabilities by Legal & General."
Others questioned whether the size of the transaction would result in pension funds reconsidering the perceived maximum size for bulk annuity deals. Ian Aley, senior pensions risk consultant at Towers Watson said that some might "reconsider their views".
"With both annuity pricing and pension fund asset values improving in recent weeks we can expect to see significant interest in this market in coming months, and further headline deals coming through before the year is out for schemes willing to move quickly," he added.
Mercer's lead adviser on the transaction, David Ellis, noted that Citi had been investigating the possibility of a risk transfer for more than two years.
"This is a landmark transaction, demonstrating that bulk pensions insurance transactions remain viable despite what some commentators describe as adverse conditions."
David Collinaon, co-head of business origination at PIC, said he was "proud" to have completed the transaction.
"We worked closely with all parties to help them move rapidly through the process and to give them price certainty through an 'All Risks' structure."