ICI completes £900m buy-in
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The ICI Pension Fund, for employees of the British chemical company owned by Akzo Nobel, has completed a £900m buy-in to insure the benefits of more than 7,000 pensioners.
The deal with Legal & General Assurance Society is the £9bn fund’s 12th transaction since it entered into an umbrella agreement with the insurer in 2014. L&G has completed transactions totalling £7b in aggregate.
“The trustee of the ICI Pension Fund is delighted to have completed this further buy-in transaction with Legal & General,” said Heath Mottram, chief executive of Pensions Secretariat Services.
“The trustee values its ongoing relationship with Legal & General as it continues its journey to secure the benefits of all of the members of the ICI Pension Fund.”
Andrew Kail, CEO of Legal & General Retirement Institutional, said the company was pleased to have deepened its relationship with the ICI Pension Fund in the most recent transaction.
“It falls almost 10 years to the day since the fund’s initial ground-breaking transaction with us in 2014 and highlights how well advised pension schemes can achieve great results when they have a deep, collaborative, and trusted relationship with an insurer. We look forward to continuing to work closely with the fund to secure its members' pension liabilities.”
The fund’s first transaction with L&G in 2014 was for £3bn, a record at the time. Concurrently, it also insured £600m with Prudential.
LCP and Allen & Overy have advised the pension trustees on all of the fund’s buy-ins with L&G, while Macfarlanes provided legal advice to the insurer.
Clive Wellsteed, a partner at LCP, said: “In a busy market dominated by full buy-ins, this pensioner-only transaction shows how a well-prepared scheme with a derisked investment strategy can successfully insure benefits over time to achieve its objectives.”
The scheme’s solvency level was at 99% in March 2020, with a £78m shortfall. In March 2022, the scheme was estimated to be 100% funded on a technical provisions basis, posting a £37m surplus. The results of the next full valuation, as at March 2023, are due by June this year.
Other derisking transactions with chemical firms included a £430m buy-in of Venator Group's Tioxide Pension Fund with L&G in November 2022, and, in March this year, a £130m buy-in with Just Group of the Lucite International UK Pension Fund, sponsored by Mitsubishi Chemical UK.
