Press releases
PensionsFirst
David Norgrove launches innovative approach to pensions buy-out
By PensionsFirst Newsroom, 07 Dec 2011
Former Chairman of The Pensions Regulator, David Norgrove, is launching an insurance company to deliver de-risking solutions to UK Defined Benefit (DB) pension schemes. Long Acre Life is targeting schemes with liabilities in excess of £500 million, with the aim of delivering cost savings of up to 20% over traditional insurance buy-outs.
"With the DB market now clearly focused on the 'end-game', we have developed an approach which delivers the certainty of an insurance buy-in or buy-out for trustees and a unique value proposition for sponsors and their shareholders," says Norgrove. "To date, there has been a lack of viable and affordable solutions in the market to help pension schemes reduce the levels of risk that they are running. This should change outcomes for both schemes and sponsors."
The initiative - which has been designed by PensionsFirst, a leading solutions provider to the global DB pensions industry and shareholder in Long Acre Life - will create a mutual insurance solution, owned by schemes, sponsors and outside investors. The concept is similar to captive insurance but delivers both a lower cost of buy-in or buy-out for pension liabilities and the removal of associated balance sheet volatility.
"This solution creates a partnership between sponsors, schemes and Long Acre's other shareholders, delivering equal rewards and creating complete alignment of interests," explains Timothy Lyons, CEO of PensionsFirst. "Many large companies use captive insurance to insure their property and casualty risks so as to retain the profit that would otherwise be paid to an insurer. But a pure captive solution for delivering pension buyouts would consolidate the pension liability on the sponsor's balance sheet. The solution that we have designed for Long Acre will deliver the economic benefits of a captive solution through a mutually owned insurance company, removing the need to consolidate the liability."
While the cost of buyout varies according to the specifics of each scheme, they have typically been priced at approximately 140% of the IAS19 liabilities and generally been regarded as unaffordable. By allowing sponsor and pension schemes to participate in the insurance profit that would otherwise accrue to a third party insurer, Long Acre Life aims to reduce the ultimate cost of buyouts to around 120%.
1 Long Acre expects to receive authorisation from the FSA in early 2012
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PensionsFirst
Hugo James appointed CEO as PensionsFirst Capital drives new approach to the pensions de-risking market
By PensionsFirst Newsroom, 31 Jul 2012
Ex-Credit Suisse Fixed Income MD, Hugo James, joins PensionsFirst Capital as CEO to lead the company's drive to offer alternative "end-game" solutions for defined benefit pension schemes
London - PensionsFirst Capital today announced the appointment of Hugo James to lead the company's continuing push to establish market leadership in delivering cost effective insurance-based risk transfer solutions and innovative investment opportunities to defined benefit (DB) pension schemes. James - who previously was a Managing Director in Fixed Income at Credit Suisse and has more than 15 years of corporate advisory, capital markets and insurance experience - will lead the PensionsFirst Capital team in sourcing, structuring and delivering solutions to the corporate sponsors of major DB liabilities of £500m and above.
PensionsFirst Capital, which is a wholly owned subsidiary of PensionsFirst Group, offers solutions to major UK companies looking towards the "end game" in the management of their DB pension schemes, by partially or wholly transferring their pension scheme liabilities to PensionsFirst Capital's pioneering insurance companyLong Acre Life. Long Acre Life was launched by Ex-Chair of The Pensions Regulator, David Norgrove, in December 2011.
"Defined benefit pension funds have, in recent years, both destroyed tens of billions of pounds of shareholder value and caused significant concerns for corporates and scheme members alike," says James. "While many schemes have started down a road of de-risking, funding volatility shows that shareholders and members are still exposed to substantial risks. While insurance solutions offer the most complete solution to this problem, to date they have been unattractive to corporate sponsors of the larger schemes from a value and transparency perspective."
James adds: "At PensionsFirst Capital we believe that a fundamentally different approach is needed, and are therefore focusing on corporate finance driven solutions that enable corporate sponsors to fully understand the risk and reward involved in the transaction. Furthermore, this transparency will help demonstrate shareholder value to their investors and provide security to scheme members."
James was previously Managing Director of Fixed Income at Credit Suisse where he was responsible for the company's UK actuarial risk business, and notably led the award-winning £1.7 billion ITV pension scheme longevity hedge in 2011 - the third largest of its kind to be conducted in the UK. Prior to this, he was Sales Director of the Bulk Annuities team at Legal & General, where he took responsibility for all structuring and sales of bulk annuities. While there, he led the development of the company's longevity insurance and collaterised buy-in offerings while jointly developing its combined investment and insurance de-risking propositions.
"We are absolutely delighted that Hugo, who is highly-respected within the pensions industry, has decided to join PensionsFirst Capital as our new CEO," adds Timothy Lyons, CEO of PensionsFirst Group. "His unrivalled knowledge of the de-risking industry and his extensive experience of structuring and delivering innovative bulk annuity and longevity solutions that bring real value to clients will be important to our company as we continue to offer innovative insurance-based products to help pension scheme sponsors and trustees reduce their risk exposure."
Long Acre Life is not responsible for content on third party websites.