The EMI Pension Fund together with Citi have completed the largest ever pension insurance buyout with Pension Insurance Corporation (PIC).

The transaction covers £1.5bn of liabilities and 20,000 members, and enables the trustee to insure all liabilities of the fund with PIC.

Clive Gilchrist of BESTrustees and chairman of the trustee company said: "I have written to the fund members telling them that their benefits have been secured in full with PIC; as a trustee, fully securing benefits is the ultimate goal.

"An enormous amount of time and effort has been put into this by all concerned. The outcome demonstrates how worthwhile it has been."

Swapnil Katkar of Citi's pension solutions team said that by working closely with all the parties involved, the policy acquisition was concluded within five months ahead of plan, despite the low interest rate environment and volatile market conditions.

PIC co-head of business origination David Collinson said: "We are proud to have completed this transaction, the largest ever pension insurance buyout. We worked closely with all parties to help them move rapidly through the process and to give them price certainty through an "all risks" structure."

Mercer, which was the sole actuarial adviser to Citi's pension solution team in the transaction, said that it worked closely with the Citi team on a number of assignment relating to the transaction for over two years.

David Ellis, Mercer's UK bulk pensions insurance leader and lead adviser to Citi on the EMI transaction, said: "This is a landmark transaction, demonstrating that bulk pensions insurance transactions remain viable despite what some commentators describe as adverse conditions."

Dominic Grimley, Aon Hewitt risk settlement adviser and actuary, said that this transaction "surpasses" the previous £1.1bn and £1.0bn records for the T&N and Thorn schemes respectively.

He added: "The landmark deal follows a strong Q1 for placements and positive news for investors in the market, including the well-received Partnership public offering and the acquisition of Lucia policy holders' liabilities by Legal & General.

"This will leave rival bidders for the EMI scheme keen to examine the scope for alternative transactions that can proceed quickly. It will also raise questions for potential investors in this market, to consider adding capacity to the market if it continues to take off."

First published 09.07.2013

monique_simpson@wilmington.co.uk