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L&G completes £750million ICI buy-in

21 July 2016

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The ICI Pension Fund has completed a £750million buy-in with Legal & General.

It is the fund's ninth, and second largest, buy-in to date and brings the total liabilities insured to £7bn out of total scheme liabilities of around £11bn.

The transaction was signed eight working days after the EU referendum on 23 June – a record time for a transaction of this scale.

This allowed the Fund to benefit from market movements that had a favourable impact on pricing, reducing the cost of the transaction by £10million.

The ICI Fund was advised by LCP, business consultants specialising in pensions.

LCP partner Clive Wellsteed said being prepared enabled them to act fast: "We needed to move quickly in case this opportunity closed, which was made possible by having innovative umbrella contracts in place with Legal & General."

"These contracts were specifically designed to facilitate the Fund to take advantage of sudden movements in the markets while maintaining the strong contractual terms and robust collateral structures already in place."

Earlier this year, the Fund completed a £63million buy-in with Scottish Widows and added Scottish Widows to its insurer panel, alongside L&G and Prudential.

It has umbrella contracts in place with all three insurers.

In March 2014, the Fund insured £3.6 billion of pensioner liabilities through simultaneous buy-ins with Legal & General and Prudential.

The £3bn transaction with Legal & General remains the largest buy-in or buy-out policy ever executed in the UK.

At more than £7bn, the Fund has insured over twice the amount of liabilities as any other UK pension scheme.

Heath Mottram, CEO of the ICI Pension Fund, said: "The Fund's strong governance and ability to move quickly was invaluable in taking advantage of this opportunity to further de-risk the Fund."

"This was our ninth transaction since March 2014 and LCP's commitment, energy and enthusiasm for delivering an exceptional service to the Trustee is as strong now as it was the day they were appointed."

First published 21.07.2016