Legal & General completes £760 million buy-in with Sanofi Pension Scheme

FRANCE – The Sanofi Pension Scheme has insured the benefits of approximately 2,900 pensioners in a £760 million buy-in with Legal & General (L&G) Assurance Society.

Despite being a long-term client of L&G Investment Management, this is the scheme’s first bulk annuity deal with L&G.

Legal & General, founded in 1836, is one of the UK’s leading financial services groups and a major global investor, with operations in the United States, Europe, the Middle East, and Asia.

It is the UK’s largest investment manager for corporate pension schemes, with nearly £1.3 trillion in total assets under management doubling up as UK market leader in pension risk transfer, alternative asset origination, life insurance, workplace pensions, and retirement income.

The company produces healthcare products, including approximately half a billion doses of three major Covid-19 vaccines from Pfizer, Johnson & Johnson, and Moderna.

The agreement follows a £770 million settlement with The Pensions Regulator (TPR) in June, which concluded a two-year investigation into the scheme.

The agreement included £770 million in additional protection for the scheme in the event of insolvency within the next 20 years, as well as a £37 million upfront payment.

Trustee secretary Lisa Shufflebottom said: “The trustee, with support from Sanofi, is very pleased to have secured a buy-in transaction with L&G.”

This buy-in is an important step in our long-term strategy and significantly reduces risk in the scheme, thereby providing greater certainty about the future costs of providing members’ pensions.”

The transaction closed in the second half of the year, bringing L&G’s total announced transactions for 2021 to just under £4 billion, which includes a £250 million deal with the Selecta UK Pension Plan in August and an £8 million buy-in with the Atkinson Northern Limited Retirement Benefits Scheme in July.

“It is always particularly rewarding to work with long-term clients like Sanofi and to enable them to further de-risk their scheme. We take pride in providing certainty to trustees and members, and this agreement is another great example of our ability to support schemes at all stages of this journey,” said Gavin Smith, L&G Retirement Institutional head of pricing and execution.

Around £13 billion in bulk annuity transactions have now been confirmed across the market, with L&G signing the most buy-in and buyout deals to date.

In this deal, Aon advised the Trustee on the transaction, and CMS provided legal counsel. Macfarlanes provided legal counsel to Legal & General.

Commenting on this development, Aon risk settlement partner Mike Edwards said: “This buy-in was a great example of how the best value for money risk reduction is achieved through a full understanding of different risk exposures.”

CMS pensions partner Maria Rodia added: “We were delighted to support the Sanofi Trustee on this buy-in transaction with L&G. It was a genuinely collaborative process working very closely with all parties to help the trustee achieve its objective of reducing risk and securing members’ benefits – a great result all round.”

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