John Laing Pension Fund insures $443 million in liabilities

John Laing Pension Fund, London, insured £320 million ($443 million) in pension liabilities through a buy-in with Aviva.

It is the second buy-in transaction between Aviva and the pension fund for John Laing Group, a major U.K. investor and manager of infrastructure projects, following one in December 2008 for £211 million. Aviva will insure investment and longevity risk for 1,850 current retirees.

Mike Clare, chairman of trustees for the pension fund, said in a joint announcement Thursday that trustees "have been focused on achieving the right long-term derisking for the fund. The fund has had a strong relationship with Aviva since its 2008 buy-in and now was the right time to undertake a further buy-in."

In May, John Laing agreed to be acquired by Aqueduct Bidco Ltd., a newly formed company owned by KKR & Co. funds. The all-cash transaction is expected to be approved by John Laing's board. KKR will partner with infrastructure investor Equitix to jointly own the existing asset portfolio, which will continue to be managed by John Laing.

According to the acquisition announcement, KKR and Bidco said existing employment rights, including pensions for management and employees will be fully safeguarded.

Willis Towers Watson led the selection and negotiations.

According to the most recent funding statement for 2019, the £1.2 billion pension fund was 92% funded and expected to reach full funding between 2028 and 2033. According to its 2020 investment statement, BlackRock passively managed equity, corporate bond and LDI portfolios and an equity options strategy. More recent figures were not immediately available.

Jamie Cole, Aviva's head of bulk purchase annuity origination, said in the joint announcement that they continue to see strong demand from pension funds.

In a separate announcement, U.K. retirement consultant Lane Clark & Peacock said it is seeing increased demand for smaller pension funds for streamlined buy-in and buyout services. With insurers increasingly focused on larger transactions, the number of them below £100 million has fallen 30% in the past five years, it said.

LCP recently completed its 58th transaction through its streamlined buy-in and buyout services, reaching a total of £2 billion.