02 July 2010
Published in: Longevity - mortality
Rothesay Life completes £1.3bn BA pension deal
British Airways has announced that the trustees of its Airways Pension Scheme (APS) have entered into an insurance transaction with Rothesay Life, covering 20% of pensioner liabilities worth £1.3bn.
Rothesay Life has completed a number of transactions for UK pension schemes since it was set up by Goldman Sachs in 2007.
The liabilities are covered by an insurance arrangement issued by Rothesay, under which the trustees retain ownership of the assets backing the transaction, providing significant protection for the scheme. In return for the proceeds from those assets, Rothesay Life pays the agreed portion of pensioner benefits to the trustees.
BA said, "The transaction provides protection for longevity risk and provides a direct match for the pension cashflows in all inflation and interest-rate scenarios. The transaction does not change contributions from British Airways and is consistent with the long-term aims of the scheme to reduce the reliance on the employer."
Keith Satchell, chairman of Rothesay Life, said the company had insured in excess of £3.5bn of pension liabilities in the last twelve months.
Paul Spencer, chairman of the trustees of the Airways Pension Scheme said Rothesay had been selected for the transaction for a number of reasons, one of which was "the execution certainty, which gave us the ability to deliver this solution at a pre-agreed price level."