The transaction was structured to allow for further risk transfer deals with Legal & General to be completed on pre-agreed terms
DB (U.K.) Pension Scheme, England, insured £570 million ($783 million) in liabilities through a buy-in deal with Legal & General Assurance Society, a spokesman confirmed.
Legal & General said the deal was completed under what is known as an umbrella contract, which allows for completion of future transactions with Legal & General quickly and easily on pre-agreed terms when favourable pricing opportunities arise.
The spokesman said the plan will look to complete further transactions.
The trustees and Deutsche Bank, the plan sponsor, were advised by Lane Clark & Peacock on the derisking options. Transaction legal advice was provided by law firm CMS Cameron McKenna Nabarro Olswan, and legal advice was provided by Slaughter and May. Aon provided actuarial and investment advice.
Law firm Eversheds Sutherland provided legal advice to Legal & General.
It is a significant step on our derisking journey and the excellent outcome with Legal & General reflects the expertise and collaborative approach of our advisers and our close working relationship with the bank. It establishes a strong platform for future derisking of the scheme, Michael Wrobel, chairman of the trustee board of the DB (U.K.) Pension Scheme, said in a news release.
Jeremy Sowden, head of pensions and benefits U.K. at Deutsche Bank, added in the release: We have a very strong working relationship with the trustee board and this transaction represents a continuation of that productive partnership. It is part of the ongoing journey to reduce risk in relation to our defined benefit pension obligations, benefiting the scheme members, the trustee board and the bank.
David Fink, partner at LCP, which advised the trustee, said the consultancy believed “a targeted, intelligent strategy using umbrella contracts is going to increasingly be the norm for large schemes”.