BAA Pension Scheme, London, completed a £325 million ($436 million) buy-in with Legal & General Group.
The pension fund's sponsoring employer, Heathrow Airport Holdings Ltd., also issued a £160 million long-dated index-linked bond directly to L&G, said a news release by the insurer.
The buy-in covers 1,300 participants. Further details on the size of the pension fund, the proportion of liabilities covered by the deal and the bond weren't immediately available.
"Genuine collaboration and innovation can truly generate value to all parties," said Phil Wilbraham, chairman of the pension fund trustee, in the release. "I am delighted with the completion of this innovative transaction with Legal & General, which at the same time derisks the position of our scheme members, enables Heathrow to strengthen their financing position ahead of our airport expansion and provide access to competitive financing for the benefit of passenger and airline customers."
Mercer was lead adviser on the risk transfer deal. "By working closely with Legal & General and Heathrow, the scheme has secured attractive pricing and a robust contract," said Andrew Ward, head of risk transfer at the consultant, also in the release. "This continues the positive steps taken over recent years to reduce risk in the scheme and improve the security of members' benefits." Details on previous risk-reduction moves could not be learned by press time.
Spokesmen could not immediately be reached for comment.