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Willis Towers Watson advises on buy-in deal for the Aliaxis UK Defined Benefit Pension Scheme

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Willis Towers Watson has advised the Trustees of the Aliaxis UK Defined Benefit Pension Scheme on a buy-in transaction with Just Group, representing GBP85 million structured across two tranches of pensions in payment.

The initial tranche, with a value of approximately GBP35 million, was completed in November 2016. This ‘top-slice’ focussed on removing a particular concentration of risk by deploying medical underwriting to insure a small group of the largest liabilities.
 
A second tranche, with a value of GBP50 million, was completed in December 2017 on a standard underwritten basis and covered the Scheme’s remaining 350 uninsured current pensions in payment.
By structuring the transaction in this way, a more optimal overall price was able to be achieved and, for the second tranche, allowed the process to move on in a timely manner that suited the Trustees.
 
The Trustees of the Aliaxis UK Defined Benefit Pension Scheme said: “Following the success of the first buy-in transaction, the Trustees were happy to continue our partnership with Just.  The second transaction has further increased the security of our members’ benefits at a price that was very attractive to the Trustees.”
 
Willis Towers Watson says: “This was a very interesting transaction that required a new approach to secure the best value for the Trustees. Splitting the transaction into two parts allowed us to secure efficiencies for our client in both the process and pricing – and being able to medically underwrite the first transaction secured a further material cost-benefit. The Trustees’ existing relationship with Just meant that they were able to move quickly to secure favourable terms within a short period of time at the end of 2017.”
 
Just Group says: “The financial benefits of medically underwriting buy-ins is well appreciated, but by splitting this transaction into two the benefits were increased. The concentration of risk of the largest liabilities was removed first taking advantage of medical underwriting, and the terms were available for a quick second transaction at a time which suited the trustees and resulted in optimal pricing.”

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