L&G hails record £4bn BA pension deal

Insurance giant Legal & General has secured a recordbreaking deal to insure £4.4 billion of historic pension scheme liabilities for British Airways.

The group, founded in 1836, said the deal – the largest ever bulk annuity policy arranged with a UK pension scheme – is “groundbreaking”, covering nearly 22,000 pensioners.

Nigel Wilson, chief executive of L&G, hailed the contract win and said there are more transactions set to be announced in coming months. L&G said it is actively quoting on £27bn of UK bulk annuity business, which sees it take on pension liabilities for firms.

The insurer reported £500 million of pension risk transfer sales in the first half of 2018, with the BA annuity deal boosting year-to-date sales to £5.3bn.

Wilson commented that the surging levels of bulk annuity business show “the strong demand for insurance, supported by increasing affordability, as trustees seek to improve security for members and companies look to remove legacy liabilities”.

Paul Dedath, insurance analyst at Shore Capital, said: “If the number deals completed in the first half was a little light of expectations, L&G has delivered on the promise of a bumper second half.”

BA said in December that it had agreed with unions to close its final salary pension scheme and replace it this year. The current defined benefit scheme has 17,000 members, while the airline’s defined contribution pension scheme, which has about 20,000 members, will also be replaced. 0 CEO Nigel Wilson sees further transactions ahead