RSA Group completes £6.5bn buy-in deal with Pension Insurance Corporation

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The RSA Group – a wholly owned subsidiary of Canadian multinational Intact Financial Corporation – has concluded a buy-in deal with Pension Insurance Corporation (PIC), insuring approximately £6.5bn of liabilities and covering the pensions of 40,000 members of its two pension schemes – the Sal Pension Scheme (SALPS) and the Royal Insurance Group Pension Scheme (RIGPS).

This makes it the largest-ever bulk annuity transaction from pension schemes to insurer, with pricing agreed amidst unprecedented market volatility during the UK liability-driven investments (LDI) crisis, according to PIC.

Following full implementation of the transaction, PIC’s solvency ratio would be in excess of 200% on a pro-forma basis, based on 30 December 2022 market conditions, it added.

PIC’s in-house legal team, which worked on all legal aspects of the transaction for PIC, were advised by CMS Cameron McKenna. Lane Clark and Peacock (LCP) advised RSA and Intact on all aspects of the buy-in process, from whether a transaction might be viable through to completion.

Slaughter and May provided legal advice to RSA and Intact. Aon and Sackers advised the trustees of SALPS, and WTW and DLA Piper advised the trustee of RIGPS, throughout the entire transaction process. Penfida provided covenant advice to both trustee boards.

Louis Marcotte, executive vice-president and chief financial officer at Intact, said: “The current market environment provides an excellent opportunity to remove UK pension exposure on IFC’s balance sheet and maintain the security of the benefits of 40,000 RSA UK pension scheme members.”

Ray Cox, chair of SALPS, and David Smith, chair of RIGPS, said in a joint statement that PIC was flexible in its approach, “presenting innovative solutions to previously intractable problems, as well as proactively addressing issues which might have derailed the process”.

Uzma Nazir, head of origination structuring at PIC, said: “From pricing during the unprecedented volatility of the LDI crisis in the autumn of last year to structuring the buy-in to address the issue of asset suitability, this transaction overcame many of the hurdles that very large pension schemes face as they accelerate their de-risking plans in light of rising Gilt yields.”