(September 3, 2013) — The InterContinental Hotels Group has transferred all of its final salary pensions risk for its UK pension fund to Rothesay Life.
The transaction, which covers £440 million worth of liabilities—two-thirds of which are for active members—took place during what experts are calling “a good time to proceed with a deal”, thanks to competitive market pricing levels.
Jerome Melcer, director in PricewaterhouseCoopers’ pensions team and transaction lead for the engagement with InterContinental Hotels Group, said: “The deal is an excellent outcome for the company, trustees and pension scheme members.
“We’ve been tracking market pricing for some time and recent improvement and the competitive nature of the buyout market meant now was a good time to proceed with a deal.
“If present market pricing levels hold we would expect a steady flow of similar deals in the second half of 2013.”
This year is predicted to be a record one for pension risk transfers in the UK. By the end of July 2013, publically announced buyouts and buy-ins had exceeded £3 billion, including a record £1.5 billion buyout by music group EMI, according to analysis from consultants and actuaries LCP.
The recent market rally resulted in the pension fund’s deficit being significantly shrunk, meaning the employer was only required to put in “a minimal additional contribution”, according to Rothesay Life’s statement.
Addy Loudiadis, chief executive at Rothesay Life, said: “This transaction is a further illustration of the momentum that Rothesay Life has in the pensions de-risking market at a time when that market is showing strong signs of growth.
“This year is shaping up to be one of the most productive in terms of volume of risk transferred to insurers.”
Rothesay Life’s parent company Goldman Sachs announced last month it plans to sell the majority of its stake, driven by the new capital requirements from Basel III regulation’s impact on its European insurance arm, a source informed on the matter told aiCIO.
As of June, assets related to the insurer totalled $9.66 billion, and consisted primarily of financial instruments. Liabilities outstripped assets at $10.62 billion.
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