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BAE agrees GBP2.7bn longevity swap with Legal & General


A&O has advised BAE Systems plc, the corporate sponsor of the BAE Systems 2000 Pension Plan, on a transfer of longevity risk arising from the Pension Scheme to Legal & General Assurance Society (LGAS). This longevity swap is the single largest pensions insurance transaction in the UK to date.

The liabilities of the Pension Scheme transferred to LGAS the deal amounted GBP2.7bn and covered approximately 31,000 pensioners. The transaction, which took the form of a collateralised insurance contract, involves the periodic payment by the trustee of the Pension Scheme to LGAS of the amount which the Pension Scheme expects to have to pay to pensioners. In return, LGAS pays the amount that the Pension Scheme in fact has to pay to pensioners. In this way, the risk that the scheme's actual liabilities exceed expected liabilities is transferred to LGAS.

The A&O team was led by insurance partner Philip Jarvis, with support from insurance senior associate Kate McInerney and counsel Andrew Barton. Funds partner Pavel Shevtsov, assisted by associate Revathi Srinivasan, provided advice on the custody aspects of the transaction. ICM partner Parya Badie and associates Shanthi Vignasen and Suanne Duhig provided advice on the collateral structure. Data protection input was provided by Corporate senior associate Naomi Leach, supported by associate Alex Shandro. Pensions support was provided by Giannis Waymouth and Neil Bowden.

For further information, please contact Margherita Orlandini,, on +44 203 088 4196.




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