M&G has announced a value share bulk purchase annuity (BPA) proposition, offering an alternative to traditional buy-in solutions.
The company finalised this £500m ($520.96m) transaction with a private corporate sponsor and its UK pension scheme, covering approximately 3,200 pensioner as well as deferred members.
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It allows trustees to secure member benefits in a similar manner while enabling corporate sponsors to share in the risks and rewards of insuring their well-funded pension schemes.
This approach aims to balance member security with potential financial benefits for the sponsors.
M&G re-entered the bulk annuity market in September 2023. Since then, the company has written near £1.4bn of new business.
M&G’s existing annuity book stands at around £15bn, with more than 400 transactions completed from 1997 to 2016.
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By GlobalDataM&G has also appointed Kerrigan Procter as managing director of its Corporate Risk Solutions business, effective January 2025.
Procter will spearhead the company’s growth strategy in the UK pensions de-risking market with the company set to write a substantial volume of value share BPAs in the coming years.
M&G CEO Life Insurance Clive Bolton said: “This ground-breaking value share BPA transaction provides approximately 3,200 pension scheme members with the ultimate security of a buy-in, while sharing the financial risk and upside with the corporate sponsor. This significant de-risking milestone has been made possible thanks to the strong alignment of interests, collaboration and commitment between all parties involved.
“By completing the first ever BPA transaction that shares value with the sponsor, we are showcasing our ability to create innovative solutions that address our clients’ requirements. This has the potential to transform the market by providing an alternative option for sponsors of large UK pension schemes to consider as part of their de-risking endgame.”
PwC was the lead adviser for this transaction.
PwC Partner Alison Fleming said: “We are thrilled to have supported the sponsor as lead adviser on this transaction, including both the buy-in and the structuring, set up and commercials for the captive reinsurer. Implementation of this ‘first of its kind’ structure is the culmination of our work with the sponsor on pensions over a number of years.”
