Pension Insurance Corporation has completed a £230m (€267m) insurance buy-in for the UK pension scheme of Pilkington Group, a glass manufacturing company owned by Japanese Nippon Sheet Glass group.

The transaction was completed in the wake of the UK referendum on the country’s membership of the European Union, with the vote to leave triggering a rise in the value of Gilts.

Gilt yields fell again after the Bank of England earlier this month announced that it was cutting its policy rate to 0.25%, and re-launched - and expanded - quantitative easing.

The bid-yield on UK 10-year Gilts fell to a record low of 0.501% earlier in August, according to Bloomberg figures cited by Kames Capital.

Uzma Nazir, an actuary at the Pension Insurance Corporation (PIC), told IPE that the deal with the Pilkington scheme was concluded in early August.

The buy-in was preceded by a market review exercise and the negotiation of a price lock mechanism.

The latter is a common feature of the lead-up to a insurance deal being concluded, although Nazir said that in this case a further look was taken because of the market volatility following the referendum.

“We had took a closer look at how the scheme was invested and what we could do on that mechanism to mean that the pricing that we were charging was similar to how the scheme’s assets were moving,” she said.

Nazir said that there has been “a tangible increase in interest from trustees in buy-ins since the Brexit referendum”, with the Pilkington scheme benefitting from the higher Gilt prices and exchanging the Gilts for a buy-in policy.

John Baines, partner in the risk settlement group of Aon Hewitt, which was the lead advisor to the trustee of the Pilkington Superannuation Scheme, said that the market review exercise and price lock mechanism “meant that we were able to ensure a predictable and positive outcome for the scheme and capitalise on the attractive pricing currently available in the bulk annuity market, driven by market conditions following the EU referendum”.

Aon and fellow consultancy Mercer have said that market volatility in the wake of the Brexit vote could present good bulk annuity pricing opportunities for UK defined benefit (DB) schemes.

Pilkington Group Limited is a wholly owned subsidiary of Tokyo-based Nippon Sheet Glass Co Ltd.

Elsewhere, Just Retirement has completed a £65m bulk annuity deal with one of the DB schemes sponsored by engineering and public services firm Amey.

The transaction, involving two separate buy-in policies, covers the pension benefits of 1,000 scheme members.

PwC advised the trustee of the Amey OS Pension Scheme.

It said that, after initial insurer quotations, the deal took five weeks to be completed with prices “fully protected against market activity during the EU referendum period”.

Amey is owned by Ferrovial, a Spanish multinational civil engineering company. 

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