British Airways insured £4.4 billion ($5.7 billion) in liabilities of its Airways Pension Scheme, Hounslow, England, in a buy-in with Legal & General, a spokeswoman said.
The bulk annuity, the largest U.K. risk transfer deal to date, covers about 60% of all pensioner liabilities of the plan. The transaction incorporates existing longevity reinsurance contracts of around £1.7 billion that APS entered with Canada Life Reinsurance and PartnerRe, the release said.
The pension fund, which is 90% hedged and is for employees hired before 2003, previously entered into two longevity swaps and a synthetic buy-in that are not part of this deal.
"This transaction is the latest in a number of insured arrangements entered into by the Airways Pension Scheme. It demonstrates the vision and determination of the trustee to reduce risk and increase security for participants. Today's announcement is the culmination of much hard work undertaken over several months and we are pleased to be taking this significant step in the scheme's derisking journey," Virginia Holmes, chairwoman of the pension fund's trustee, said in a news release.