Michelin Pension Completes $1.96B Annuity Buy-In With Aviva

Insurance firm Aviva PLC announced Wednesday that the insurer completed a 1.5-billion-pound ($1.96 billion) bulk purchase annuity full-scheme buy-in with the U.K.-based Michelin Pension and Life Assurance Plan. The pension risk transfer will cover 15,000 participants.

“The Trustee is delighted to have improved the long-term security of members’ benefits by completing this buy-in transaction with Aviva,” said Vincent Dormieux, the chair of trustees for Michelin Pensions Trust Ltd., in a statement.

The deal, completed in September, is the largest bulk purchase annuity transaction announced so far in 2024.

“We’re really pleased to have led on this important transaction and to have helped the Trustee secure its members’ benefits with Aviva,” said Stephen Purves, head of risk settlement at pension consultant XPS Group, which advised on the transaction, in a statement. “[Our] strategy to make this transaction stand out in a busy market … included simplifying our transaction requirements before going to the insurers and an ‘in-house’ solution to deal with the Plan’s illiquid assets.”

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The pension risk transfer market shows no sign of slowing. In the first half of 2024, approximately 20 billion pounds of annuity buy-in/buyout transactions have occurred in the U.K., according to Legal and General Retirement America, which expects that number to rise as high as 40 billion pounds by the end of the year.

According to an LGRA report, more than half of surveyed defined benefit pension plans anticipated completing an annuity buy-in or buyout.

“The longer-term pipeline is the largest we have ever seen, and we continue to expect elevated PRT volumes over the next decade,” the report stated.