Legal & General Completes £800m Pensions Buy-In with Honda UK Scheme

Legal & General has completed an 800 million pound pensions buy-in with the Honda Group's UK scheme. The deal, which covers approximately 1,400 pensioners, marks one of the largest bulk annuity deals of the year. The transaction demonstrates the growing demand for buy-ins as companies seek to transfer pension risks to insurers. Legal & General's asset management business had 1,159.2 billion pounds in assets under management in 2023.

Legal & General (L&G) has finalized an 800 million pound pensions buy-in with the Honda Group's UK scheme, covering approximately 1,400 pensioners. This significant transaction underscores the growing demand for buy-ins as companies seek to transfer pension risks to insurers. The deal is one of the largest bulk annuity deals of the year [1].

The buy-in deal highlights L&G's strategic focus on pension risk transfer (PRT), a segment where the company has been increasingly active. L&G's asset management business managed £1.159.2 trillion in assets under management in 2023, reflecting its robust financial position and capacity to handle large-scale transactions [1].

The transaction aligns with L&G's broader strategy to enhance its competitive advantage in pension annuities and bolster its asset management position in key geographies and channels. This move follows L&G's partnership with Blackstone, announced in June, which aims to combine their respective credit platforms to offer innovative investment solutions and extend international reach [1].

The partnership with Blackstone involves L&G’s asset management business developing public/private hybrid credit solutions that integrate Blackstone’s private credit platform with L&G’s active fixed income capabilities. This collaboration is expected to accelerate L&G’s expansion into global wealth and wholesale channels and provide clients with diversified investment-grade assets [1].

António Simões, L&G’s group CEO, noted that the partnership with Blackstone will further cement L&G's market-leading position in pension risk transfer and enable it to address growing demand for public-private hybrid investment products. The deal will also benefit L&G by providing a more diverse pipeline of assets for its annuity book and growth in asset management as it develops more sophisticated investment solutions for clients around the world [1].

Philip Sherrill, global head of insurance at Blackstone, commented that the partnership showcases the best that Blackstone can offer to insurance company clients, highlighting the breadth of their capabilities in originating assets, identifying investment opportunities, and designing products that meet the needs of both institutional clients and individual investors [1].

This significant transaction underscores the increasing role of private credit in the portfolios of insurers, particularly those in the life and annuity sector. According to Goldman Sachs Asset Management, 62% of insurance investors plan to increase their private markets allocations this year, reflecting a broader trend of diversification away from traditional fixed-income assets [2].

References:
[1] https://www.ipe.com/news/landg-partners-with-blackstone-to-accelerate-growth-ambition/10131552.article
[2] https://www.ai-cio.com/news/legal-general-to-form-credit-partnership-with-blackstone/