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14 June 2016

LCP advises ICI pension
fund on eighth buy-in to reach record-breaking £6.3bn of liabilities insured

The ICI Pension Fund (the Fund) has completed a £630m buy-in with Scottish Widows and added Scottish Widows to its insurer panel alongside Legal & General and Prudential.  An innovative “umbrella” contract is in place with each insurer.

In March 2014, the Trustee announced that it had insured £3.6 billion of pensioner liabilities through simultaneous buy-ins with Legal & General and Prudential. The £3.0bn transaction with Legal & General remains the largest buy-in or buy-out policy ever executed in the UK. Since then the Trustee has completed six further transactions covering £2.7bn of liabilities using contractual documentation designed to facilitate quick and efficient follow-on transactions. These follow-on transactions all benefit from the strong contractual and collateral terms captured in the “umbrella” contract with each insurer. Read the case study here.

On 14 June 2016 it was announced that the Fund had entered into a £630m buy-in with Scottish Widows. Scottish Widows has also been added to the Fund’s panel of insurers, alongside Legal & General and Prudential. The Trustee is able to move quickly to execute further buy-ins when competitive pricing is available from any of the three insurers now on the panel.

Heath Mottram, CEO of the ICI Pension Fund, said “LCP’s appointment in 2013 to assist us in incorporating buy-ins into our de-risking strategy continues to prove to be one of the most successful appointments the Fund has made in recent times. The Fund has now insured over £6.3bn of liabilities since March 2014 across eight transactions and is the “go to” scheme when the insurers on our panel have competitive pricing available.”

The Fund has now insured c60% of its total liabilities and transferred £6.3bn of longevity risk at competitive pricing.

The press release regarding the Scottish Widows transaction can be found here.