Home ListingJune 12, 2015

Pension De-Risking Lands in the Middle East

A Kuwait-based company has insured its UK pension benefits.

Reported by Featured Author

The Kuwait Petroleum Services Company Pension Scheme has completed the UK’s largest medically-underwritten bulk annuity transaction to date.

Working with consultants Aon Hewitt, the company collected health and well-being information from members and secured a £42.3 million deal with annuity specialists Partnership.

“We expect an increasing proportion of bulk annuity transactions under £100 million will be medically underwritten.” —Costas Yiasoumi, PartnershipThe trustees used Aon Hewitt’s AHEAD platform, which has been developed to give insurers specific underwriting information needed for this type of transaction.

“Being able to secure all benefits in a scheme of this size is yet another milestone in this rapidly expanding market,” said John Baines, principal consultant at Aon Hewitt. “By using AHEAD we gained a 90% member response—a figure we have seen on all our AHEAD transactions so far—which gave the trustees access to a significantly better price than would otherwise have been available.”

Baines said using this detailed information had cut the price of the de-risking transaction by around 10%.

“Over time we expect that an increasing proportion of bulk annuity transactions under £100 million will be medically underwritten,” said Costas Yiasoumi, director of defined benefit solutions at Partnership.

The insurer’s analysis showed that 93% of medically underwritten bulk annuity processes over 2013 and 2014 ended with successful insurer selection, which was “an enviable achievement for the bulk annuity market,” according to Yiasoumi.