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Money L&G secures record £4.4bn British Airways pension deal

05:05  14 september  2018
05:05  14 september  2018 Source:   msn.com

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L&G secures record £4.4bn British Airways pension deal © Provided by The Press Association L&G secures record £4.4bn British Airways pension deal

Legal & General has secured a record-breaking deal to insure £4.4 billion of historic pension scheme liabilities for British Airways.

The insurance giant said the deal – the largest ever bulk annuity policy arranged with a UK pension scheme – is “groundbreaking”, covering nearly 22,000 pensioners.

Nigel Wilson, chief executive of L&G, hailed the contract win and said there are more transactions set to be announced in the next few months.

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Laura Mason, chief executive of L&G’s retirement institutional division, added: “We are proud to have delivered this groundbreaking transaction, the largest bulk annuity transaction completed in the UK market.

“This is a great example of Legal & General delivering for UK companies and their pension members, enabling pension schemes to provide security to their pensioners in retirement.”

L&G said it is actively quoting on £27 billion of UK bulk annuity business, which sees it take on the pension liabilities for firms.

L&G, which was founded in 1836, reported £500 million of pension risk transfer sales in the first half of 2018, with the BA annuity deal boosting year-to-date sales to £5.3 billion.

Firms are taking advantage of better pension scheme funding due to a buoyant stock market to pass on their liabilities to insurers.

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Mr Wilson said the surging levels of bulk annuity business shows “the strong demand for insurance, supported by increasing affordability, as trustees seek to improve security for members and companies look to remove legacy liabilities”.

Paul DeDath, insurance analyst at Shore Capital, said: “If the number and size of deals completed in the first half was a little light of expectations, L&G has now delivered on the promise of a bumper second half.”

BA announced in December it had reached agreement with unions to close its final salary pension scheme and replace it with a new one this year.

The current defined benefit scheme has 17,000 members, while the airline’s defined contribution pension scheme, which has about 20,000 members, will also be replaced.

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