UK - The Wesleyan Assurance Society has beaten competition from Prudential and Legal & General to win bulk annuity mandates together worth £230m.
The mandates were awarded by the ASW Pension Plan and the ASW Sheerness Steel Group Pension Fund. ASW went into receivership in July 2002.
The two schemes are now being wound up, a process which should complete in 2007.
Philip Healy, former member-nominated trustee of the ASW scheme, was present at the beauty parade and told Global Pensions he hoped pension fund use of the buyout mechanism would catch hold.
“We went with Wesleyan because they offered a better return for people like myself, I’m going to get slightly more as a deferred pension than I would had we signed up with L&G or Prudential,” he commented.
“It can only be good for schemes such as ourselves when there are a lot more players in the business.”
The trustees were advised by Mercer Human Resource Consulting and Hymans Robertson
Weslyan has been in the insurance business for 160 years but these mandates mark its first foray into the bulk annuity arena, until recently dominated by Prudential and Legal & General.
There have been many new entrants in recent months, including vehicles set up by ex-Prudential executives Mark Wood, with Paternoster, and Isabel Hudson, with Synesis Life.
Wesleyan actuary Tim Pindar explained that the £230m transferred to his firm represented the entire assets of the two pension schemes, in return for which Wesleyan would provide the annuities promised to the scheme’s members.
“We are taking on £230m worth of liabilities in exchange for £230m, with a profit margin built in,” he said.
“The members will become policy holders of Wesleyan, and we are getting all the assets of the scheme as well as payments for providing those annuities.”
Craig Errington (pictured), chief executive of Wesleyan said his firm would improve results for policyholders.
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