The transfer by Philips of approximately $900 million of current retiree pension obligations is being split between Legal & General America and The Prudential Insurance Company of America, with each insurer providing 50 percent of the total monthly benefits to Philips’ retirees. Furthermore, American United Life Insurance Company, a OneAmerica company, will be issuing annuities to plan participants who had not yet retired by May 2015, bringing the total transaction between the three insurance companies to $1.1 billion and covering a total of 17,000 plan participants.
Nigel Wilson, Group CEO, Legal & General said:
“We are very pleased to have signed an agreement with Philips for our first US pension group annuity contract. The US is a key market for Legal & General. We have a successful US life assurance business, are rapidly growing our investment management business, and have now entered the US pension risk transfer market. We are a leader in these markets in the UK, and plan to be a major participant in them in the US.”
George Palms, President, Legal & General America Retirement added:
“This is an important milestone for our US pension risk transfer business. We are proud to have been selected by Philips and its respected advisers for this landmark deal. We look forward to continuing to deliver innovative pension de-risking solutions to our US clients, particularly as the trend toward split deals continues to evolve.”
The Philips deal marks Legal & General’s first pension risk transfer transaction in the US and expands upon the established success of its existing US entities, Legal & General Investment Management America (“LGIMA”) and Legal & General America (“LGA”). LGIMA will manage the assets for the US pension risk transfer (“PRT”) business and LGA’s Banner Life Insurance Company (Banner) will be the entity issuing the group annuity contract.
Legal & General’s entrance into the US PRT market is one that combines nearly thirty years of bulk annuity and PRT expertise in the UK with its proven US investment capabilities. It has amassed a global annuity book of over $68 billion as of June 30, 2015 and guarantees annuity benefits to over a million annuitants.
In recognition of the global nature of pension risk management challenges, Chicago-based LGIMA was established in 2006, and became SEC registered in 2009. LGIMA’s platform is centered on providing pension de-risking solutions to a focused client base of pension and insurance clients. This customized and focused approach, together with core competencies in credit sensitive fixed income, liability driven investing (“LDI”), and index strategies has led to the rapid growth of LGIMA which manages $120 billion in total assets under management as of June 30, 2015 spanning 115 clients, including five of the top ten largest US corporate defined benefit plans based upon assets.
The addition of the US PRT platform will enable Legal & General to provide a complete range of pension de-risking solutions to its US clients.
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