General Healthcare Group Pension and Life Assurance Plan, Brentford, England, insured £150 million ($188 million) in liabilities through a buy-in with Aviva, according to Mette Hansen, director at Redington, an adviser on the deal.
The deal, which is the £150 million plan's first risk transfer transaction, covers the liabilities of 700 participants, Ms. Hansen said. The deal was concluded at the height of the COVID-19 market collapse in March, according to a news release by Redington.
The sponsoring employer has contributed a total of £5 million in deficit repair contributions to the plan over the last 10 years. Over that period assets almost doubled. The plan had a £27 million deficit a decade ago.
"We knew we needed a radical change in approach to overcome our difficulties, but as a small scheme with minimal resource we had to think differently to find the right solution. By focusing carefully on what really mattered and working closely with the sponsor and our investment and governance experts, the trustee was able to come up with a long-term funding plan that worked for all parties," Rita Powell, chairwoman of trustees of the GHG Pension Plan, said in a news release.
Other advisers to the plan included actuarial adviser Aon, law firm Pinsent Masons and buy-in adviser Lane Clark and Peacock.
Pensions risk transfer transactions are expected to keep pace through the pandemic, with longevity swap deals set to see a record year, according to estimates from Willis Towers Watson, published Monday.
Since the beginning of 2020, Willis Towers Watson has led 13 bulk annuity deals covering more than £3.1 billion in liabilities. The firm expects more than £25 billion of new longevity swaps to take place this year.
"Prior to COVID-19, the bulk annuity market was incredibly busy, as demand from pension schemes exceeded supply from insurers. Some schemes were therefore finding it hard to get quotes, creating the potential for pricing to drift upwards over the medium term," said Shelly Beard, senior direct at Willis Towers Watson, in a news release. "This slight reset of the market has restored more balanced market dynamics."