REG - Pension Ins Corp plc - PIC, RSA's Pension Schemes complete £6.5bn buy-in

Intact FinancialAnnouncement

27/02/2023 12:45

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RNS Number : 1659R  Pension Insurance Corporation PLC  27 February 2023

PIC COMPLETES £6.5 BILLION BUY-IN WITH

RSA'S UK PENSION SCHEMES

 

London, 27 February 2023 - Pension Insurance Corporation plc ("PIC"), a
specialist insurer of defined benefit pension schemes, has concluded a buy-in
with the Trustees of two schemes sponsored by RSA Group ("RSA"), the Sal
Pension Scheme ("SALPS") and the Royal Insurance Group Pension Scheme
("RIGPS") (the "Schemes"), insuring in total c.£6.5 billion of liabilities
and covering the pensions of 40,000 members. RSA Group is a wholly owned
subsidiary of Intact Financial Corporation ("Intact" or "IFC").

 

Highlights:

-     Largest ever bulk annuity transaction from pension schemes to
insurer, covering 40,000 members and c.£6.5 billion of liabilities

-     Transfers risk from the Schemes to a life insurer specialising in
managing long-term risks, with access to the reinsurance markets

-     Landmark deal which addressed significant issues of timing and
complexity, paving the way for other very large transactions

-     Pricing agreed amidst unprecedented market volatility during the LDI
crisis

-     Improvement in pension scheme funding levels due to rising gilt
yields created a favourable opportunity for the sponsor to accelerate the
Schemes’ de-risking, as well as de-risk its own balance sheet, and for the
Trustees to enhance member security

-     Transaction facilitated by upfront contribution from Intact of
approximately £500 million

-     Complex structuring considerations included accommodating the
Schemes' existing longevity and asset swaps

-     Following full implementation of the transaction, PIC's solvency
ratio would be in excess of 200% on a pro-forma basis, based on 30 December
2022 market conditions. Further details on PIC's solvency position will be
provided along with PIC's 2022 year end results in March

 

PIC's in-house legal team, who worked on all legal aspects of the transaction
for PIC, were advised by CMS Cameron McKenna. Lane Clark and Peacock ("LCP")
advised RSA and Intact on all aspects of the buy-in process, from whether a
transaction might be viable through to completion. Slaughter and May provided
legal advice to RSA and Intact. Aon and Sackers advised the Trustees of SALPS,
and WTW and DLA Piper advised the Trustee of RIGPS, throughout the entire
transaction process. Penfida provided covenant advice to both Trustee Boards.

 

Louis Marcotte, Executive Vice President and Chief Financial Officer at
Intact, said: "The current market environment provides an excellent
opportunity to remove UK pension exposure on IFC's balance sheet and maintain
the security of the benefits of 40,000 RSA UK pension scheme members."

 

Ray Cox, Chairman of SALPS, and David Smith, Chairman of RIGPS, said in a
joint statement: "We are delighted to have completed this transaction,
securing the pensions for members of both Schemes for the long term. PIC were
flexible in their approach, presenting innovative solutions to previously
intractable problems, as well as proactively addressing issues which might
have derailed the process. We want to thank the various advisory firms for
their support and hard work in completing this landmark transaction."

 

Uzma Nazir, Head of Origination Structuring at PIC, said: "We are proud to
have completed an extremely complex bulk annuity deal, the largest pension
scheme to insurer transaction the market has yet seen. From pricing during the
unprecedented volatility of the LDI crisis in the autumn of last year to
structuring the buy-in to address the issue of asset suitability, this
transaction overcame many of the hurdles that very large pension schemes face
as they accelerate their de-risking plans in light of rising gilt yields.

 

"The transaction could only have been completed with strong teamwork from the
Trustees, the sponsor, and their respective advisors, and I want to thank
everyone involved for their constructive engagement which enabled this
positive member outcome."

 

- ends -

 

Notes to Editors:

 

For further information please contact:

 

PIC
            Jeremy Apfel   + 44 (0)207 105 2140

 
apfel@pensioncorporation.com (mailto:apfel@pensioncorporation.com)

 

Apella Advisors for PIC                   Anthony Silverman
+44 (0)7818 036579

 
            PIC@apellaadvisors.com (mailto:PIC@apellaadvisors.com)
 

 

RSA
 
Anthony Murtagh +44  (0)7469 441622

anthony.murtagh@uk.rsagroup.com (mailto:anthony.murtagh@uk.rsagroup.com)

 

About PIC

The purpose of PIC is to pay the pensions of its current and future
policyholders. PIC provides secure retirement incomes through comprehensive
risk management and excellence in asset and liability management, as well as
exceptional customer service. At 30 June 2022, PIC had insured 293,400 pension
scheme members and had £44.1 billion in financial investments, accumulated
through the provision of tailored pension insurance buyouts and buy-ins to the
trustees and sponsors of UK defined benefit pension schemes. To date, PIC has
made total pension payments of almost £9 billion to its policyholders.
Clients include FTSE 100 companies, multinationals and the public sector. PIC
is authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and Prudential Regulation Authority (FRN 454345).
For further information please visit www.pensioncorporation.com
(http://www.pensioncorporation.com)

 

About Intact Financial Corporation

Intact Financial Corporation (TSX: IFC) is the largest provider of property
and casualty (P&C) insurance in Canada, a leading provider of global
specialty insurance, and, with RSA, a leader in the U.K. and Ireland. Our
business has grown organically and through acquisitions to over $20 billion of
total annual premiums.

 

In Canada, Intact distributes insurance under the Intact Insurance brand
through a wide network of brokers, including its wholly-owned subsidiary
BrokerLink, and directly to consumers through belairdirect. Intact also
provides affinity insurance solutions through the Johnson Affinity Groups.

 

In the US, Intact Insurance Specialty Solutions provides a range of specialty
insurance products and services through independent agencies, regional and
national brokers, and wholesalers and managing general agencies.

 

Outside of North America, the Company provides personal, commercial and
specialty insurance solutions across the U.K., Ireland, and Europe through the
RSA brands.

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