Honda agrees £800m buy-in deal
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The Honda Group – UK Pension Scheme has completed a c.£800m buy-in, insuring the retirement benefits of over 1,700 retirees and more than 3,000 deferred members.
Legal & General Assurance Society snapped up the Japanese carmaker’s scheme, which is sponsored by Honda Motor Europe. L&G said the scheme is a longstanding client of its asset management business.
The insurer provided a price lock to the scheme’s assets during the transaction while the terms were finalised. The premium was paid through a combination of an in-specie asset transfer and cash, with L&G also providing a partial, flexible deferred premium solution to support the run-off of the scheme’s illiquid assets over the coming years, according to L&G.
Trustee chair Ray Runza said: “The security of our members’ benefits has been our highest priority, so this transaction marks an outstanding outcome for all involved. The trustee board is delighted to see a successful outcome after a rigorous selection process across market insurers and months of dedicated preparation, and effort by all advisers.”
Member option factors were provided to the scheme during the buy-in period to support continued use of the scheme’s online benefit modeller, with the trustees having a strong focus on member experience.
“We are delighted to have helped the scheme secure its members’ retirement benefits. What really differentiates our proposition is our ability to offer schemes a multi-award-winning customer service offering as well as bespoke transaction structuring that caters to individual schemes’ practical needs,” said chief executive of Institutional Retirement at L&G, Andrew Kail.
The trustees and sponsor were jointly advised by EY. UK financial services partner Swapnil Katkar said: “This transaction demonstrated that executing a buy-in within a strict timeframe remains possible while still achieving attractive pricing and suitable contractual terms through a concerted effort. In addition to the standard due diligence, this transaction involved substantial and extensive review of insurers’ administrative and customer service capabilities, and we are confident that the completed deal will benefit both the savers and the UK markets.”
Alongside EY, the trustees used Mercer as investment advisers, Hymans Robertson as section 36 advisers and XPS Group as the scheme actuary. Honda had investment advice from Isio and legal advice from Sackers, while Burges Salmon gave legal advice to the trustee. L&G had CMS as its lawyers.
L&G said the buy-in supports its strategic ambition of writing £50bn to £65bn of UK pension risk transfer business over the five-year period ending in 2028.
This is the fifth risk transfer deal announced by L&G so far this year. Anglo American insured £785m relating to three defined benefit schemes, while the Inchcape Motors Pension Scheme signed a £505m buy-in, the insurer said in March.
Legal & General Assurance Society snapped up the Japanese carmaker’s scheme, which is sponsored by Honda Motor Europe. L&G said the scheme is a longstanding client of its asset management business.
The insurer provided a price lock to the scheme’s assets during the transaction while the terms were finalised. The premium was paid through a combination of an in-specie asset transfer and cash, with L&G also providing a partial, flexible deferred premium solution to support the run-off of the scheme’s illiquid assets over the coming years, according to L&G.
Trustee chair Ray Runza said: “The security of our members’ benefits has been our highest priority, so this transaction marks an outstanding outcome for all involved. The trustee board is delighted to see a successful outcome after a rigorous selection process across market insurers and months of dedicated preparation, and effort by all advisers.”
Member option factors were provided to the scheme during the buy-in period to support continued use of the scheme’s online benefit modeller, with the trustees having a strong focus on member experience.
“We are delighted to have helped the scheme secure its members’ retirement benefits. What really differentiates our proposition is our ability to offer schemes a multi-award-winning customer service offering as well as bespoke transaction structuring that caters to individual schemes’ practical needs,” said chief executive of Institutional Retirement at L&G, Andrew Kail.
The trustees and sponsor were jointly advised by EY. UK financial services partner Swapnil Katkar said: “This transaction demonstrated that executing a buy-in within a strict timeframe remains possible while still achieving attractive pricing and suitable contractual terms through a concerted effort. In addition to the standard due diligence, this transaction involved substantial and extensive review of insurers’ administrative and customer service capabilities, and we are confident that the completed deal will benefit both the savers and the UK markets.”
Alongside EY, the trustees used Mercer as investment advisers, Hymans Robertson as section 36 advisers and XPS Group as the scheme actuary. Honda had investment advice from Isio and legal advice from Sackers, while Burges Salmon gave legal advice to the trustee. L&G had CMS as its lawyers.
L&G said the buy-in supports its strategic ambition of writing £50bn to £65bn of UK pension risk transfer business over the five-year period ending in 2028.
This is the fifth risk transfer deal announced by L&G so far this year. Anglo American insured £785m relating to three defined benefit schemes, while the Inchcape Motors Pension Scheme signed a £505m buy-in, the insurer said in March.
