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British Airways’ Airways Pension Scheme agrees £4.4bn pensioner buy-in with Legal and General, the largest bulk annuity transaction ever in the UK market

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18 September 2018

The British Airways Plc sponsored Airways Pension Scheme (“APS”), and Legal & General Assurance Society Limited (“Legal & General”) announced today that they have completed a ground-breaking £4.4bn pensioner bulk annuity buy-in which will cover circa 60% of all pensioner liabilities.

This is the largest pensioner buy-in completed in the UK market to date and is a significant step in reducing risk in the Scheme.

The transaction accounts for existing longevity reinsurance contracts of circa £1.7 billion that APS entered into via a captive insurer with Canada Life Reinsurance and PartnerRe, which were incorporated into the buy-in arrangement. Following the completion of the £4.4bn buy-in transaction announced today and allowing for previous pensions insurance transactions, APS is now 90% hedged against all longevity risk.

The APS Trustee worked with PwC as lead transaction advisors to identify and secure an attractive buy-in pricing opportunity. Allen & Overy, Eversheds Sutherland and Willis Towers Watson advised the Trustee throughout the process. Legal & General were advised by Clifford Chance.

Virginia Holmes, Chair of the Scheme Trustee, said:

“This transaction is the latest in a number of insured arrangements entered into by the Airways Pension Scheme. It demonstrates the vision and determination of the Trustee to reduce risk and increase security for members. Today’s announcement is the culmination of much hard work undertaken over several months and we are pleased to be taking this significant step in the Scheme’s de-risking journey.”

Laura Mason, CEO Legal & General Retirement Institutional (LGRI), said:

“We are very pleased to have been able to work with the British Airways Pensions team and to have completed this ground-breaking transaction. It is a great example of how Legal & General is helping trustees secure their members’ benefits through our ability to manage complex circumstances and offer flexible solutions.

Today’s transaction was the culmination of a long period of engagement with the Trustee and its team and was the result of many individuals’ collaborative engagement and efforts. We look forward to building on our relationship with the British Airways Pensions team and further supporting them in delivering for the members of APS.”

Kate McInerney, Counsel, Allen & Overy said:

“We are very proud to have supported the Trustee in this ground-breaking deal which is testament to its commitment to reducing risk and adding security for members.”