Jeff Sayers, Managing Director of Bulk Annuities and Investment Strategy at Scottish Widows, said: “I am delighted to announce Scottish Widows' entrance into the bulk annuity market. The execution of this £400m buy-in demonstrates the strength of our offering to help trustees and scheme sponsors achieve their de-risking aims.
“We have built a strong capability in this growing market and believe, in conjunction with the wider Lloyds Banking Group, we offer a compelling proposition – a trusted brand, financial strength, investment and administration capabilities, and an experienced team of industry experts.”
The transaction covers around two thirds of the pension Scheme’s liabilities in respect of 4000 individuals and was executed with an innovative premium payment process, designed specifically to accommodate the pension scheme’s disinvestment timetable, whilst minimising execution risk.
Emma Watkins, Director of Bulk Annuities at Scottish Widows, said: “This transaction represents a significant milestone for Scottish Widows and we are thrilled to have been chosen by the Trustees of the Wiggins Teape Pension Scheme on this significant buy-in arrangement, and look forward to becoming a long term de-risking partner.
“We have worked closely with the Trustees and their advisers to tailor the arrangement to meet the Scheme's needs. Through the provision of an innovative mechanism, we have been able to ensure premium certainty for the Scheme over an extended execution period. Furthermore, our pricing approach and use of up-to-date Scheme member information in the run-up to the transaction date extends pricing certainty post-transaction and ensures efficient implementation of the policy.”
Keith Taylor, Head of Pensions of The Wiggins Teape Pension Scheme “The buy-in of the pensioner liabilities is a key de-risking step for the Scheme, with a large proportion of the Scheme’s liabilities now insured. KPMG were the specialist advisers who advised us on this transaction. They managed the process with professionalism and expertise, understanding the market and the objectives of all parties making clear recommendations at every stage and delivered on every target”.
The Scheme’s Trustees who are BESTrustees represented by Bruce McNess, Beaufort Trust Corporation represented by Simon Hartley and Law Debenture Trustees represented by Vicky Paramour commented that “We are delighted to execute this transaction with Scottish Widows. The deal enhances the security of members’ benefits, strengthens the funding of the Scheme and mitigates cost for the sponsoring employer. The ability to complete the deal quickly was key to ensuring the Scheme could take advantage of current gilt markets.”
Tom Seecharan, KPMG Director, Lead adviser, said: “From tendering the lead broker role to investing properly in setting a de-risking strategy at the outset, the Trustees and sponsor did everything right and got an excellent outcome as a result. Scottish Widows had to beat 6 other insurers to be chosen, but the experience of their team was clear to see. There was no hesitation in choosing them and they were easy to transact with.”
Watkins added: “KPMG set out clear requirements and timescales throughout the whole process and stuck to them. This enabled all parties to focus on achieving the right de-risking outcome for the Scheme in an efficient manner.”
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