In one of the most significant defined
pension (DB) scheme buy-in deals yet, UK risk transfer specialist
Rothesay Life has insured £1.3bn ($2bn) of pension liabilities of
the Airways Pension Scheme, one of the two DB schemes sponsored by
British Airways (BA).
The insurance cover is for some 20% of the
pension payments due in respect of scheme members already in
receipt of pension benefits.
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The deal is termed a buy-in because the schemes
liabilities are covered by an insurance arrangement issued by
Rothesay, under which the trustees retain ownership of the assets
backing the transaction. In return for the proceeds from those
assets, Rothesay Life pays the agreed portion of pensioner benefits
to the trustees.
The BA deal is fourth since Rothesay Life
establishment in 2008 and brings total DB fund assets covered by it
to £4.3bn. Rothesay Life is a wholly-owned unit of US investment
bank Goldman Sachs.
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