The deal between Legal & General and Deutsche Bank will secure the benefits of around 2,000 retirees and deferred members.
In addition, the scheme is sponsored by a Deutsche Bank subsidiary and is the scheme’s third buy-in, but the first to include deferred members.
Currently, the scheme’s total buy-in amounts to £1,500m including a c.£570 million buy-in between Legal & General and Deutsche Bank Pension Scheme, announced in February 2021.
Furthermore, LCP was lead transaction adviser and provided strategic longevity de-risking advice to the trustee of the scheme and transaction legal advice was provided by CMS. Aon acted as scheme actuary and investment adviser with Slaughter and May as ongoing legal adviser. DLA Piper UK provided legal advice to Legal & General.
Reaction to the Legal & General buy-in with Deutsche
Aysha Patel, new business and origination lead, Legal & General Retirement Institutional, commented: “We are pleased to have completed this buy-in with the Scheme, continuing to strengthen our relationship with the Trustee and the Bank. This transaction demonstrates that partial buy-ins continue to be an effective de-risking tool for larger schemes on their way to full insurance, allowing them to take advantage of favourable market opportunities when they arise. We look forward to providing additional security to their pension scheme members.”
Michael Wrobel, chair of the trustee board, DB (UK) pension scheme, said: “We are very pleased to have insured another significant proportion of the Scheme’s liabilities with Legal & General, further reducing the risks the Scheme is exposed to. The existing relationship with Legal & General, including the umbrella contract in place, resulted in a smooth and efficient process benefiting all parties and ultimately the members of the Scheme. The Trustee and the Bank remain ready to continue to take advantage of future opportunities to further de-risk as they arise.”
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Jeremy Sowden, head of global pension and benefits, Deutsche Bank, explained: “This latest transaction means that approximately half of the total liabilities of the Scheme have now been insured, covering not just all pensions in payment but also a significant proportion of pensions that are yet to do so. We will continue to work with the Trustee to extend the buy-ins as further opportunities arise. The existing relationship with Legal & General allowed us to move quickly to lock in attractive pricing and is an excellent result for all parties.”
David Fink, partner, LCP, added: “I am delighted to have helped the Trustee and Deutsche Bank to take their next step on their de-risking journey completing a third buy-in for the Scheme. Careful thought went into the transaction structure to permit a proportion of deferred liabilities to be included. The phased buy-in strategy has been very successful for the Scheme and we were able to leverage its existing relationships and the work completed for previous transactions to secure highly attractive pricing in what is proving to be a very busy market in 2023 with many schemes competing for insurer attention.”