Pension Insurance Corporation (PIC) has completed its third major de-risking deal of 2016, sealing a buy-in with a UK glass manufacturer worth £230 million ($303 million).
The transaction covers roughly 13% of the liabilities of the Pilkington Group’s pension, and follows a £1 billion longevity swap executed in late 2011.
Pilkington is the latest plan sponsor to take advantage of market conditions post-Brexit as high-quality corporate bonds have become cheaper relative to UK government bonds. The ICI Pension Fund secured a £750 million buy-in just eight working days after the June 23 referendum had sent gilt prices soaring.
John Baines, partner at Aon Hewitt, which advised on the transaction, said the pension negotiated a “price lock” to ensure it was able to “capitalize on the attractive pricing currently available in the bulk annuity market.”
Uzma Nazir, actuary at PIC, said there had been “a tangible increase in interest from trustees in buy-ins since the Brexit referendum.” PIC has completed “a number of transactions over the past few weeks,” Nazir added. None of these have been made public.
Prior to the referendum, PIC secured a £900 million buy-in with Aon’s UK retirement plan in May. This followed a £300 million buy-in and reinsurance deal with a UK pension attached to communications giant Siemens. The specialist pension insurer also backed the UK’s biggest ever full buyout in November, a £2.4 billion deal with the Philips UK pension.
Related: Adding Risk to De-risk