6 Jun 2019
Legal & General announces largest UK bulk annuity with Rolls-Royce UK Pension Fund
Legal & General Group Plc announces that the business (“Legal & General”) has written a pension risk transfer (“PRT”) transaction in excess of £4.6 billion with the Rolls-Royce UK Pension Fund (“RRPF”), covering approximately 33,000 in-payment pensioners. This is the largest bulk annuity written in the UK and, including this, Legal & General has now transacted four of the five largest UK PRT deals, namely, British Airways (£4.4 billion), ICI (£3.0 billion) and TRW (£2.5 billion).
Legal & General has a long standing relationship with Rolls-Royce, having provided investment management services to the pension plan since 1989. In 2016, Legal & General issued a £1.1bn buyout for the Vickers Group Pension Scheme. Legal & General will continue to provide investment management services for a significant proportion of RRPF’s remaining £8.4 billion asset portfolio following today’s transaction.
In aggregate, Legal & General has transacted over £6.2 billion of global PRT year to date (H1 2018: £0.7bn). The financial metrics and Solvency II capital strain of these deals are in line with previous transactions.
The Rolls-Royce transaction again demonstrates our extensive strengths and synergies. We have a unique combination of pension, actuarial and structuring expertise coupled with the capacity to create and source long-term direct investments at scale. The global PRT opportunity remains sizeable and compelling: only 8% of the £2.2 trillion of UK DB pension liabilities and 5% of the $3.5 trillion in the US have completed PRT. Our pipeline and appetite for further transactions in H2 remains strong.
Nigel Wilson, Chief Executive, Legal & General”
We have developed an excellent relationship over many years with Rolls-Royce, providing both investment and pension de-risking expertise and support. This transaction, which demonstrates the strength and expertise of the Legal & General team, is excellent news for the pension plan and the sponsor. It will provide enhanced security for plan members and the quality customer service for which Legal & General is known.
Laura Mason, CEO Legal & General Retirement Institutional
The Trustee is delighted to have achieved this outcome for our members. The transaction will provide greater security and certainty around the retirement benefits our members have been promised. This has been made possible by careful risk management over many years and a strong collaboration between the Trustee, Rolls-Royce and our advisers.
Liz Airey, Chair of Trustees, Rolls-Royce Pension Fund