By Elena Vardon
United Utilities Group and Legal & General Group have announced a significant pension-risk transfer deal worth £1.8 billion ($2.3 billion), according to statements sent via email on Tuesday.
In this agreement, the trustees responsible for United Utilities’ pension program will take out an insurance policy with Legal & General. The premium paid will then be invested by Legal & General to cover the benefits of United Utilities’ pension program members.
A spokesperson for United Utilities expressed their satisfaction with this strategic move, stating, “The pension scheme trustees have taken the next step in their derisking strategy and are insuring around two-thirds of the pension liabilities with Legal & General to ensure even greater long-term security of the schemes.” The spokesperson also highlighted that this action strengthens United Utilities’ financial resilience, with a gearing level of 58%, and secures sufficient liquidity to cover cash flow until at least 2026.
Andrew Kail, Chief Executive of Legal & General Retirement Institutional, expressed his pleasure in working with the trustees to complete this transaction and provide further long-term security to the pension scheme members. He also emphasized that Legal & General has written £6.7 billion of pension risk transfer business in the U.K. since the beginning of this year.
