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(Alliance News) - Legal & General Group PLC on Friday announced agreement for the full buy-in of the pension scheme of UK health and beauty retailer Boots UK Ltd.
The London-based insurer and asset manager said the GBP4.8 billion buy-in was the UK's largest single transaction of its kind by premium size. It also was L&G's largest single transaction by number of members.
Nottingham, England-based Boots is part of the Retail Pharmacy International division of Illinois, US-based retailer Walgreens Boots Alliance Inc.
Legal & General said the deal, which secures the benefits of 53,000 retirees and deferred members of the Boots Pension Scheme builds on an over 20-year relationship between the two companies, during which Legal & General had provided investment management services to the scheme. It said the latest transaction completes the pension de-risking process for Boots.
L&G said that in the year to date it now has written global pension risk transfers worth GBP13.4 billion. It added that the market was especially strong in the UK, with "unprecedented demand" due to rising pension funding ratios.
Legal & General said that as of November 17, it had a solvency ratio of around 224%, net of the Boots Pension Scheme transaction.
"This transaction represents another innovative step forward in [defined benefit] pension de-risking by providing a combined investment and insurance solution for the scheme's asset holdings, allowing the scheme to achieve the certainty of a transaction whilst also maximising value by transferring its assets...to Legal & General," the company said.
Legal & General added that its "strong" solvency position "provides the group with significant firepower to continue to invest in attractive growth opportunities."
"We are very pleased to have agreed this buy-in today with the Boots Pension Scheme, representing our largest ever single transaction," commented Andrew Kail, chief executive officer of Legal & General Retirement Institutional. "This is testament to our long-standing relationship with the client, and I am proud that we have been able to work seamlessly across our insurance, reinsurance and investment management capabilities to deliver an excellent outcome.
"We are continuing to see an unprecedented acceleration in demand in this sector, driven by more pension schemes being closer to buyout than ever before."
Shares in Legal & General were down 0.3% at 226.90 pence in London on Friday morning.
By Emma Curzon, Alliance News reporter
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