By Louis Goss
The specialist insurer that bought out House of Fraser’s pensions fund for £600m last year has completed a £400m deal to take over UK engineering firm Amey’s retirement scheme.
Pension Insurance Corporation’s (PIC’s) deal will see the firm take responsibility for paying out 3,473 pensions, covering £400m worth of liabilities.
Bulk purchase annuity (BPA) deals see pensions funds pay a lump sum to hand liability for their schemes over to specialist insurers. In return, the insurer takes responsibility for ensuring the scheme’s members get paid.
The insurance firm’s £400m pensions buy-in deal follow’s London private equity firm Buckthorn Partners’ acquisition of Amey in December 2022.
The deal comes as pension funds have pushed to de-risk their schemes, in a shift that has driven a boom in buyout deals.
Analysts from Peel Hunt previously forecast higher gilt yields and volatile markets could see £200bn worth of BPA deals over the next three years – compared to £200bn worth of deals over the past decade.
Peel Hunt’s analysts added that two thirds of pensions funds with fewer than £1bn worth of assets are currently considering undergoing a pensions buyout deal.
PIC’s head of business development Mitul Maguida noted that “schemes are particularly well funded at the current time, and we hope many schemes are able to make similar announcements over the course of 2023.”
Established in 1921, Amey runs and maintains some of the UK’s major infrastructure operations, including the Docklands Light Railway (DLR) and the Manchester Metrolink.
The London headquartered firm, which employs 11,000 UK staff, is also responsible for maintaining prisons, roads, and airports throughout Britain.
The Amey deal comes after PIC completed a £600m buy out of House of Fraser’s pensions fund in June 2021.
PIC currently has a £44.1bn portfolio – including £10.9bn worth of ESG assets – covering more than 293,000 policyholders.
Stephen Purves, head of risk settlement at XPS Pensions Group, which advised on the deal, said: “Despite volatile market conditions, there have been some very attractive pricing opportunities in the bulk annuity market during 2022.”
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