LONDON (Alliance News) - Legal & General Group PLC Wednesday said it has won a bulk annuity contract with ICI Pension Fund, covering GBP3.00 billion of its liabilities, as the life insurer moved to reinforce its expectation that it will exceed the GBP2.1 billion of annuity net flows in 2013.
Legal & General said the deal is the largest ever bulk annuity contract arranged by a pension scheme in the UK. Bulk annuities involve an insurer assuming the obligations of a defined-benefit pension plan.
While the individual annuities market in the UK has been left reeling by new government plans set to give people more flexibility over how they manage their pension pots in retirement, the bulk annuities market wasn't the target of Chancellor of the Exchequer George Osborne's 2014 Budget.
The life insurer also reiterated operating cash guidance for Legal & General Retirement for 2014 of GBP290 million, compared to GBP260 million in 2013.
Legal & General has pinpointed the bulk annuity market as one of its significant growth areas, citing statistics from the Pensions Regulator that show the UK has GBP1.8 trillion of defined benefit pension liabilities. Legal & General estimated there were around GBP600 billion of liabilities relating to pensions in payment based on November 2013 statistics.
"We expect to see continued growth in the bulk annuity market both in the UK and overseas. Our leadership in investment management and longevity, and our strength in both the accumulation and decumulation phases of pension savings mean we are uniquely positioned to capitalise on rising demand for liability driven investing, longevity insurance, buy-in and buy out," Kerrigan Procter, managing director, Legal & General Retirement, said in a statement.
Legal & General shares were Wednesday quoted at 214.00 pence, up 2.2%.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Legal & General (LGEN)
