Legal & General announces record £925m Assured Payment Policy (APP) transaction

£1.5bn APP transactions now completed

Legal & General Assurance Society Limited (“Legal & General”) today announces that it has completed a £925 million Assured Payment Policy (APP) transaction with the Legal & General Group UK Pension and Assurance Fund (the “Fund”), securing the cashflows to support benefit payments payable to approx. 2,000 retired and 2,800 deferred members of the pension fund.

This is the largest APP transaction completed to date and is Legal & General’s third APP transaction. Legal & General launched the innovative solution as part of a wider £1.1 billion transaction with the AIB Group UK Pension Scheme in December 2019.

As a result of this transaction, Legal & General’s total APP transaction volumes now exceed £1.5bn in value.

This transaction also marks the insurer’s second such deal with a Legal & General pension scheme, following a £400 million APP transaction with the Legal & General Group UK Senior Pension Scheme in December 2020.

Legal & General’s unique APP solution provides pension schemes with an efficient and precise method of liability cashflow matching, selectively insuring against investment related risks such as changes in asset yields, interest rates and inflation. An APP allows a pension scheme to begin its de-risking journey with an insurer and provides greater certainty on the timing and cost of a future buy-in or buyout.

In May 2021, £61 million of the AIB Group’s APP was converted to a buy-in policy, demonstrating how APPs facilitate the de-risking journey.

Legal & General invest the funds paid as buy-in and APP premiums back into the real economy, helping to tackle issues around climate change, the housing crisis and regeneration of towns and cities. Investing in this way can create a virtuous circle of UK savers funding infrastructure assets that provide a public service and boost the economy.

The Trustee was advised on the transaction by LCP, Redington and Gowling WLG.

We are delighted to have provided increased certainty for the pension fund’s members with this transaction and are grateful for the proactive, collaborative approach taken by the trustees and their advisors to deliver a smooth transaction.

This transaction is further demonstration of our ability to deliver innovative, trusted solutions to meet the evolving needs of our clients. With three APPs now transacted and a partial conversion already completed, I’m excited to see real momentum growing with this solution. There is clear demand in the de-risking market for innovation and Legal & General want to be at the forefront of that.

Laura Mason, CEO, Legal & General Retirement Institutional

For further information, please contact:

Margrit Williams

PR & Communications Director, Legal & General Retirement Institutional

Contact for:

DB/Final Salary pension schemes de-risking -buy-ins, buy-outs, longevity insurance
Alternative de-risking solutions – APP, ISS
Pension scheme administration
Re-insurance
(UK, USA, Canada, Bermuda and Ireland)

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