TIDMLGEN
RNS Number : 5850U
Legal & General Group Plc
24 November 2023
Legal & General Group Plc
24 November 2023
Legal & General agrees GBP4.8 billion full buy-in for the
Boots Pension Scheme
-- Secures the benefits of all 53,000 retirees and deferred
members of the Scheme, making it the UK's largest single
transaction of its kind by premium size and, for L&G, the
largest single transaction by number of members.
-- Builds on a long-standing relationship with Boots. Legal
& General has provided investment management services to the
Scheme for over 20 years.
-- Legal & General has written GBP13.4 billion of global
Pension Risk Transfer (PRT) business year to date.
UK's largest single buy-in by premium size
Legal & General Group plc ("Legal & General") today
announces that it has agreed a GBP4.8 billion full buy-in with the
Boots Pension Scheme ("the Scheme"). This buy-in secures the
benefits of all 53,000 retirees and deferred members of the Scheme,
making it the UK's largest single transaction of its kind by
premium size and, for L&G, the largest single transaction by
number of members.
The sponsoring company, Boots ("the Sponsor"), founded 174 years
ago, is the UK's leading health and beauty business with over 2,000
stores and 52,000 employees.
Legal & General has a long-standing relationship with Boots,
having provided investment management services to the Scheme for
over 20 years. This buy-in begins the conclusion of a de-risking
process that the scheme first embarked on in 2001.
This transaction represents another innovative step forward in
DB pension de-risking by providing a combined investment and
insurance solution for the Scheme's asset holdings, allowing the
Scheme to achieve the certainty of a transaction whilst also
maximising value by transferring its assets (or the associated sale
proceeds) to Legal & General.
Legal & General worked in close partnership with the Sponsor
and Trustee to manage this transaction which incorporated both
asset transition and deferred premiums features.
This bulk annuity is Legal & General's largest ever single
PRT transaction.
Cardano was the strategic advisor to Walgreens Boots Alliance
and lead broker for the transaction, while Baker McKenzie provided
legal advice. Aon was strategic adviser, lead investment adviser
and broker for the transaction representing the Trustee, while
Sackers provided legal advice. Slaughter and May and Simmons &
Simmons provided legal advice to Legal & General.
We have now written GBP13.4bn of global PRT year to date
Activity in the UK PRT market remains strong, with rising
pension funding ratios driving unprecedented demand. At the half
year, Legal & General's global PRT premiums totalled GBP5.0
billion. Since then, the Group has completed a further GBP7.2
billion of new business in the UK, and a further $1.5 billion in
the US. In aggregate, Legal & General has transacted circa
GBP13.4 billion of global PRT this year (GBP10.2 billion of net
premiums [1] ).
Since the beginning of 2018 we have written a total of GBP59.6
billion of PRT:
L&G PRT volumes (GBP
billion) 2018 2019 2020 2021 2022 YTD
====================== ===== ===== ===== ===== ===== =====
UK 8.4 10.3 7.6 6.2 7.2 12.1
====================== ===== ===== ===== ===== ===== =====
International 0.8 1.1 1.3 1.0 2.3 1.3
Total 9.2 11.4 8.9 7.2 9.5 13.4
====================== ===== ===== ===== ===== ===== =====
Accelerating demand is enabling Legal & General to acquire
these liabilities earlier than it might have a year ago, thereby
increasing the average lifespan of the PRT portfolio. [2]
In addition to the GBP10.2 billion of global net PRT premiums
written year to date, we have also written GBP1.2 billion of
individual annuities, taking total annuity net premiums written
year to date to GBP11.4 billion. [3]
Indicatively, this creates new business CSM of cGBP910m, adding
to the Group's total CSM balance. This was GBP12.4bn at HY23 and
had grown at 7% over the year. The additional CSM created so far in
H2 demonstrates our ability to continue to grow the CSM
balance.
We operate a capital light business. We have deployed GBP270
million of capital to write GBP12.1 billion of UK PRT. [4] As
indicated at HY23, we expect to achieve self-sustainability on the
UK annuity portfolio again in 2023.
A strong solvency position providing significant firepower, and
a progressive dividend
As at 17 November, and net of this transaction, Legal &
General's solvency ratio was estimated to be 224%. [5]
This strong solvency position provides the Group with
significant firepower to continue to invest in attractive growth
opportunities. The Board continues to weigh investment carefully
against the relative attractiveness of returning additional capital
to shareholders.
As highlighted at the HY23 results, we continue to expect Net
Surplus Generation (Operational Surplus Generation plus New
Business Strain) to exceed dividends in 2023. The Board has
announced its intention to grow the dividend at 5% per annum to
FY24.
Andrew Kail, CEO, Legal & General Retirement
Institutional
"We are very pleased to have agreed this buy-in today with the
Boots Pension Scheme, representing our largest ever single
transaction. This is testament to our long-standing relationship
with the client, and I am proud that we have been able to work
seamlessly across our insurance, reinsurance and investment
management capabilities to deliver an excellent outcome.
We are continuing to see an unprecedented acceleration in demand
in this sector, driven by more pension schemes being closer to
buyout than ever before. Against this backdrop, we have posted a
record year with GBP13.4bn of global PRT written to date."
Alan Baker on behalf of Law Debenture, as Chair of Trustee,
Boots Pension Scheme
"This agreement with Legal & General gives added protection
to our members' long-term benefits by removing market uncertainty
and other financial exposures. We welcome the additional payment
from Boots, in addition to the sum it has already committed. As a
result, the Scheme will not be reliant on Boots to pay benefits to
members and pensions will be protected for decades to come.
"I would like to take this opportunity to thank my fellow
Trustee directors and our predecessors, the Scheme officers and
advisers for their hard work over many years to reach this positive
outcome for our members."
Sebastian James, Senior Vice President and Managing Director,
Boots
"We are very pleased to have achieved the gold standard outcome
for our pension scheme and to have fully secured the benefits of
all members with a highly respected insurer. This will provide
greater certainty to both the scheme members and to Boots, and is
an excellent outcome for both parties."
Notes to editors
About Legal & General
Established in 1836, Legal & General is one of the UK's
leading financial services groups and a major global investor, with
over GBP1.2 trillion in total assets under management (as at HY23)
of which c40% (circa GBP0.5 trillion) is international. We have a
unique and highly synergistic business model, which continues to
drive strong returns. Legal & General provides powerful asset
origination and management capabilities directly to clients, which
also underpin our leading retirement and protection solutions. We
are a leading international player in Pension Risk Transfer, in UK
and US life insurance, and in UK workplace pensions and retirement
income. Our purpose is to improve the lives of our customers and
create value for our shareholders. Through inclusive capitalism, we
are investing in long-term assets, such as real estate and
infrastructure, that can help build a better society for the
future. As at 23 November 2023, Legal & General has a market
capitalisation of GBP13.6 billion.
About Legal & General Retirement Institutional
Legal & General Retirement Institutional (LGRI) works with
trustees and sponsoring companies of defined benefit (DB) pension
schemes of all sizes to settle their pension obligations and secure
scheme members' benefits, through a full range of buy-ins, buyouts
and other de-risking solutions. Our Client Services' 12-month
rolling Net Promoter Score (NPS) is above 70, which is widely
regarded as being at a "world class" level. Including the premium
to be received in relation to this transaction, LGRI has annuity
assets estimated at GBP63bn.
About Boots UK
Boots is the UK's leading health and beauty retailer with over
52,000 team members and 2,100 stores, ranging from local community
pharmacies to large destination health and beauty stores.
Boots serves its customers and patients' wellbeing for life. It
is the leading provider of healthcare on the high street and the
UK's number one beauty destination.
Boots has an unrivalled depth and breadth of product offering,
which incorporates its extensive own brand range and innovative
portfolio of brands, including No7, the UK's No1 skincare brand,
Soap & Glory, Liz Earle Beauty and Sleek MakeUP. For over 170
years, Boots has listened, learned and innovated, and it continues
to challenge itself to improve its products and services every
day.
Boots is part of Walgreens Boots Alliance, which is a global
leader in pharmacy-led, health and wellbeing retail. More company
information is available on boots-uk.com.
*Figures accurate as of 31 August 2023
[1] This figure allows for anticipated Funded Reinsurance
[2] Advisors suggest annual UK PRT volumes alone could exceed
GBP50 billion for at least the next five years ( Lane, Clark &
Peacock)
[3] Individual annuity volumes to 10 November (NB: we retain all
the risk on our individual annuity book)
[4] This includes a reduction in capital usage from risk margin
reform on business written in 2023 year to date
[5] This includes the estimated impact of risk margin reform
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCGUBDBXXDDGXS
(END) Dow Jones Newswires
November 24, 2023 02:00 ET (07:00 GMT)
Legal & General (LSE:LGEN)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
Legal & General (LSE:LGEN)
Historical Stock Chart
Von Mai 2023 bis Mai 2024