L&G has provided investment management services to the Boots plan for more than 20 years. Boots first embarked on its derisking process in 2001. That year, executives shifted the entire £2.3 billion portfolio into bonds.
The latest deal saw the sponsoring employer bring forward about £170 million in already-committed payments to the plan, as well as a commitment to pay about £500 million in additional contributions, a separate news release by Boots said.
"This agreement with Legal & General gives added protection to our members' long-term benefits by removing market uncertainty and other financial exposures," said Alan Baker on behalf of Law Debenture, chair of the trustees for the Boots plan. "We welcome the additional payment from Boots, in addition to the sum it has already committed. As a result, the Scheme will not be reliant on Boots to pay benefits to members and pensions will be protected for decades to come," he added in the release.
Cardano was strategic adviser to Boots owner Walgreens Boots Alliance and lead broker for the deal. Baker McKenzie provided legal advice. Aon provided strategic advice, investment advice and broker services to the trustees. Sackers provided legal advice to the trustees, while Slaughter and May and Simmons & Simmons provided legal advice to L&G.
A spokesperson for Aon confirmed that all participants are covered by the deal and that, in addition to the assets of the plan there was an additional payment from Boots.
Separately, the Co-operative Pension Scheme, Manchester, England, insured the remaining £4 billion of liabilities for its Co-op Section through a buy-in with Rothesay.
The deal covers almost 50,000 participants and is the final step to fully secure participant benefits as part of a long-term plan to derisk the pension fund, a news release said.
Consumer cooperative and sponsoring employer the Co-operative Group had already completed buy-ins for the overall plan, most recently insuring £1.2 billion in liabilities for its Co-operative Bank Section through a buy-in with Rothesay in December.
The deal required no contributions from the sponsoring employer since the plan is in surplus. Illiquid assets in the plan's investment portfolio were used to pay the premium, the release said.
"Through a collaborative approach and our advisers' commitment to our objectives, plus Rothesay's flexibility and partnership, we were able to navigate a significant period of volatility," said Chris Martin, professional trustee at IGG and chair of the trustees, in the release.
Aon was lead broker. Mercer was actuary and investment adviser for the pension fund, which Linklaters provided legal advice. Addleshaw Goddard provided legal advice to the company, while Gowlings provided legal advice to Rothesay.
The Aon spokesperson confirmed that the plan was now fully insured.