October 8, 2018 / 6:16 AM / 6 months ago

Legal & General strikes 2.4 billion pounds pension de-risking deal

FILE PHOTO: The logo of Legal & General insurance company at its office in central London, Britain, March 17, 2008. REUTERS/Alessia Pierdomenico/File Photo

LONDON (Reuters) - Legal & General (LGEN.L) said on Monday it had agreed a deal to insure 2.4 billion pounds in pension risk with the Nortel Networks UK Pension Plan, adding its deal pipeline was at a record high.

L&G is at the forefront of demand from some insurers to take on pension-related risk from companies, so-called ‘bulk annuities’, and said at the half-year stage that it expected sales to drive earnings into the end of the year.

The deal with Nortel allows the scheme to exit the Pension Protection Fund, Britain’s pension scheme ‘lifeboat’, where the scheme languished after Nortel went into administration in 2009.

With insolvency proceedings now resolved, the pension scheme had been able to agree a deal with L&G that will give its members better benefits than they would have received in the PPF, L&G said, with more deals likely on the way.

“This transaction brings our total volume for global pension de-risking business to more than 8.4 billion pounds for the year to date, a new record for us,” said Nigel Wilson, chief executive of the Legal & General Group.

“Legal & General’s UK pipeline is stronger than we have ever seen, with 25 billion pounds currently in active pricing discussions following the completion of the Nortel buyout. Our international pipeline is also the strongest we have ever experienced.”

The deal with Nortel covers around 15,000 pensioner members and around 7,200 deferred members, L&G said, and comes weeks after L&G secured a deal to cover 22,000 British Airways pensioners, the largest ever UK deal.

Reporting by Simon Jessop; editing by Jason Neely

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