Towers Watson Appoints New Americas Head of Investments

(March 26, 2014) — Towers Watson is continuing to shake up its leadership and investment practice. The firm announced the appointment of Steve Carlson to head of investments for the Americas business effective immediately.

Carlson was promoted from his current role as leader of US advisory services to replace Chris DeMeo, who left the firm in February to start an investment advisory business for small- and mid-market institutions, spokesperson Ed Emerman confirmed.

“We are very pleased that Steve is taking on the leadership of our Americas business and joining the investment global leadership team,” said Chris Ford, global head of investments at Towers Watson. “He has excellent business and leadership experience as well as strong investment expertise, which I am confident will help grow our business in the Americas and help us continue to provide outstanding results for our clients.”

Carlson will report to Ford, who was also promoted in February to head global investments. He replaced Carl Hess, who moved up to become managing director of the Americas investments.

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Towers Watson has over $2 trillion in assets under advisory and over $60 billion of assets under management.

“Institutional investors continue to face significant challenges in achieving competitive returns and managing risk,” Carlson said. “By partnering with our clients through an advisory or an outsourced CIO relationship, we are able to bring the full range of global investment insights to bear on their challenges.”

Carlson has 25 years of experience in investment consulting and asset management, and joined Towers Watson in 2001. Prior to his career at the firm, he was a consultant and principal at Chicago-based consulting firm J.H. Ellwood & Associates for eight years, and spent four years as a consultant with Northern Trust’s performance analytics group.

Spokesperson Emerman said the firm is unable to disclose Carlson’s new compensation. He also confirmed that Towers Watson plans to fill Carlson’s former position in the near future.

(March 26, 2014) — The UK’s largest pension buyout has been transacted by a fund using two insurers to complete the deal.

Chemical company AkzoNobel has insured its ICI Pension Fund members’ benefits—in a scheme acquired when the firm took over rival ICI in 2008—in a deal worth £3.6 billion, all partners announced today.

The fund was one of the first, and certainly the largest, to use two insurers to take on its pension liabilities: Legal & General and Prudential.

“The insurers have sought to reinsure the majority of the longevity risk immediately,” said Ian Aley, senior consultant at Towers Watson, who advised AkzoNobel on the deal. “This two-stage process is routinely used in the longevity swap market, however to date the insurers in the bulk annuity market have generally held the risk for a period of time before reinsuring.”

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So far this year, deals in the UK have made 2014 the third largest on record already, Towers Watson said. This one deal makes up almost half of last year’s record £7.6 billion transacted over the 12 months. It is double the size of the previous largest deal—a £1.5 billion transaction between music group EMI and Pension Insurance Corporation.

The longevity hedging market has also received a boost this year, through a £5 billion transaction by the UK staff pension fund of insurer Aviva, announced earlier this month.

Due to their close working relationship with insurers, Towers Watson revealed there would be more deals of this size in 2014.

“The expected surge in transaction sizes is driven by both supply and demand factors,” said Sadie Hayes, transaction specialist at the firm. “The majority of the longevity risk from these large transactions, whether they are bulk annuities or longevity swaps, will ultimately end up being reinsured. The longevity reinsurance market is currently very competitive, with an ever-increasing number of players and the growing size of transactions that the reinsurers will consider as they become more confident with UK longevity risk. This, combined with a significant improvement in solvency levels among most schemes in the last 12 months, is providing even the largest pension schemes a credible option to materially reduce risk.”

Although on a slightly smaller scale, mega buyouts have also landed in Canada. This month, an unidentified Canadian company purchased $500 million of annuities from an insurer, Towers Watson confirmed, which ranked as the largest pension risk transfer.

The record for the largest deal to date remains with US automotive company GM, which offloaded $26 billion in pension liabilities to Prudential in 2012.