LONDON (Alliance News) - Legal & General Group PLC on Thursday said it has secured a GBP230 million medically underwritten buy-in with the pension scheme of DIY retailer Kingfisher Group PLC, disclosing the details after announcing the completion of the deal in December.
The deal covers 149 specific scheme members from Kingfisher's GBP3.0 billion pension scheme, Legal & General said in a statement, and is the largest medically underwritten bulk annuity arrangement to date in the UK.
"This is another important step for the Kingfisher pension scheme on its journey towards a target of self-sufficiency by 2030. The annuity provides a further improvement to the financial security of the scheme for all members," Clive Gilchrist, chair of the trustee for Kingfisher pension scheme, said.
Cheryl Agius, head of strategic business, pension risk transfer, at Legal & General, said she expects to see the growth in "top slicing" continue, with the approach likely to be the first step towards a full buyout for many schemes.
Top slicing refers when a bulk annuity transaction is carried out for a smaller number of members, representing a larger proportion of the value of the liabilities within a particular pension scheme. Having access to additional medical data allows insurers to price risk in relation to life expectancy with more certainty.
"Medically underwritten bulk annuities were traditionally viewed as a solution for smaller schemes and the emergence of top slicing helps open up medical underwriting to medium and larger schemes as well," Agius said.
Shares in Legal & General Group were down 3.0% at 232.00 pence on Thursday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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