The Total UK Pension Plan has insured GBP1.6 billion of pensioner liabilities with Pension Insurance Corporation (PIC) in the second largest UK bulk annuity transaction to date.
LCP was appointed as specialist adviser to both the trust and Total, completing a process within seven months of appointment.
Iain McCombie, chairman of the trustee board, says: “At GBP1.6bn, this transaction represents a significant risk reduction step for our GBP2.6bn defined benefit section of the plan, reducing funding volatility and providing additional protection for members’ benefits.”
Emma Watkins, partner at LCP, and lead adviser of the transaction, says: “This is the second largest buy-in completed in the UK to date. The size of the transaction has required the implementation of an innovative structure that has been successfully achieved with the cooperation of PIC.”
Clive Wellsteed, partner at LCP and head of the buy-out practice, says: “This deal forms part of a growing trend of FTSE100 and blue-chip companies looking to de-risk their staff pension schemes, since the recently announced ICI Pension Fund buy-in (GBP3.6bn) demonstrated bulk annuity contracts can be successfully structured at a scale not previously seen.
“We expect to see an increasing trend of GBP1bn-plus transactions of this nature, with 2014 having the potential to see over GBP10 billion in bulk annuity business which would be the largest yearly total yet. We are delighted that LCP has developed a reputation as the market leader in this specialised field.”
Total is the world’s fifth-ranked publicly-traded international oil company, with almost 99,000 employees in over 130 countries.
