Legal & General has agreed a £4.8bn full buy-in for the Boots Pension Scheme in what is the UK’s biggest ever single transaction by premium size.
The deal secures the benefits of all 53,000 retirees and deferred members of the scheme.
Cardano was the strategic advisor to Walgreens Boots Alliance and lead broker for the transaction, while Baker McKenzie provided legal advice. Aon was strategic adviser, lead investment adviser and broker for the transaction representing the trustee, while Sackers provided legal advice. Slaughter and May and Simmons & Simmons provided legal advice to Legal & General.
LCP analysis shows the largest ever buy-in was for £6.5bn for multiple RSA pension schemes with PIC, which until today was followed by the £2.7bn British Steel Pension Scheme transaction with Legal & General.
L&G has now written £10.2bn of global net pension risk transfer (PRT) premiums year to date, as well as £1.2bn of individual annuities, taking total annuity net premiums written year to date to £11.4 billion.
Andrew Kail, CEO, Legal & General Retirement Institutional says: “We are very pleased to have agreed this buy-in today with the Boots Pension Scheme, representing our largest ever single transaction. This is testament to our long-standing relationship with the client, and I am proud that we have been able to work seamlessly across our insurance, reinsurance and investment management capabilities to deliver an excellent outcome.
“We are continuing to see an unprecedented acceleration in demand in this sector, driven by more pension schemes being closer to buyout than ever before. Against this backdrop, we have posted a record year with £13.4bn of global PRT written to date.”
Alan Baker on behalf of Law Debenture, as chair of Trustee, Boots Pension Scheme says: “This agreement with Legal & General gives added protection to our members’ long-term benefits by removing market uncertainty and other financial exposures. We welcome the additional payment from Boots, in addition to the sum it has already committed. As a result, the Scheme will not be reliant on Boots to pay benefits to members and pensions will be protected for decades to come.”
John Baines, partner in the Risk Settlement team at Aon in the UK, says: “This transaction is further evidence of the innovation that can be achieved at scale and pace in an incredibly busy, yet buoyant, insurance market.
“A key element in achieving this transaction, was dealing with the significant portfolio of illiquid investments held by the scheme. Working in close partnership with the sponsor and trustees, we applied our experience, innovative solutions and lessons learned from other deals of similar size, ensured this wasn’t a barrier to securing benefits. This, combined with taking action on investments early and having the right investment toolkit, ensured risk was managed effectively, costs were reduced and the transaction completed.”
