MillerCoors Purchases Group Annuity Contract

Company to transfer $900 million in pension obligations to Athene Annuity and Life.

Molson Coors Brewing Co. has agreed to purchase a group annuity contract from Athene Annuity and Life Co. in a move to de-risk the pension plan of its subsidiary MillerCoors LLC. 

Under the terms of the deal, Athene will assume from the MillerCoors Pension Plan obligations to pay future pension benefits to more than 6,000 retirees and beneficiaries. As a result of the transfer, MillerCoors will reduce its pension projected benefit obligation by more than $900 million.

Beginning May 1, 2018, Athene will begin making benefit payments to the affected plan participants, and will also provide ongoing administrative services. The pension plan’s participants will receive the same monthly benefit they were previously receiving from MillerCoors. Molson Coors said the move is intended to reduce the overall size of the pension plan, future cost volatility, and annual plan administrative expenses.

State Street Global Advisors was hired an independent fiduciary to evaluate and choose the insurer based on financial strength, qualifications, and overall capabilities. Willis Towers Watson served as strategic advisors, and Jones Day provided the legal counsel for MillerCoors in the deal.

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In the company’s most recent quarterly report, Molson Coors said it made an additional, discretionary contribution of $200 million to its US defined-benefit pension plan in the third quarter as part of its deleveraging goals. It also said it expected to make a total of approximately $310 million in cash pension contributions for 2017.

Other companies that have made similar moves to de-risk their pension plans by purchasing a group annuity over the past several months include The Ball Corporation, a packaging and aerospace company; financial services firm The Hartford; computer hardware company NCR Corp.; and newspaper publishing companies A.H. Belo and The New York Times Co.

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EnCap Investments Closes Fund XI at $7 Billion

Fund XI focused on upstream sector of the North American oil and gas industry.

Houston-based EnCap Investments has closed its 11th fund at $7 billion. Fund XI is focused on making investments in the upstream sector of the North American oil and gas industry. The fund was oversubscribed and hit its hard cap.

EnCap’s prior fund, EnCap Energy Capital Fund X, L.P., closed at $6.5 billion in April 2015.

“The opportunity set for investment remains compelling and dynamic, and we are pleased to have a new pool of capital from a diverse range of investors to begin taking advantage of opportunities in the marketplace,” said Doug Swanson, managing partner, in a statement on the close.

EnCap started fundraising for the vehicle last year, and held a first close in December 2016. At that time, the fund was already partially invested. For this fund, EnCap is continuing its focus on buying energy assets with a value tilt and working with management teams it already knows well when possible.

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In July, EnCap Investments made a $500 million commitment to San Antonio-based Silverback Exploration II, an independent oil and gas exploration company. Silverback II was formed by the same team that successfully led its predecessor company, Silverback Exploration, which was also backed by EnCap. Silverback Exploration developed a significant position in the Delaware Basin, which it eventually sold to Centennial Resource Development Inc., for $855 million. Silverback Exploration II was created with similar development goals.

Known investors in EnCap Energy Capital Fund XI include Los Angeles City Employees Retirement System (LACERS), which committed $40 million; Texas County and District Retirement System, which committed $75 million; Public Employees Retirement Association of New Mexico; Hawaii Employees’ Retirement System; District of Columbia Retirement Board; Florida State Board of Administration; Merced County Employees Retirement Association; Oregon Investment Council; and Berkshire Taconic Community Foundation.

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