Scottish and Southern Energy (SSE) has entered into two buy-ins with Pension Insurance Corporation (PIC), and a longevity swap with Legal & General (L&G).
The three deals are together worth £1.2bn and cover nearly 4,000 members in the Scottish Hydro-Electric Pension Scheme (SHEPS) and the Scotia Gas Networks Pension Scheme (SGNPS).
The SHEPS benefitted from a £250m buy-in with PIC covering 800 pensioners, and an £800m longevity swap for 2,400 pensioners with L&G, in the first deal believed to combine the two risk reduction tools. Another £100m buy-in, covering 600 pensioners, was completed with SGNPS.
The buy-in transactions were negotiated together, allowing cost savings to be agreed via competitive pricing, and generating a more efficient process lasting no longer than three weeks.
Inclusive of the buy-ins, SHEPS' assets totalled £2.2bn as of 30 June, while SGNPS had £1.1bn of assets.
Consequently, the FTSE 100 firm said the schemes' funding positions have been improved considerably.
Hymans Robertson acted as the lead adviser on all transactions, with its Club Vita arm providing longevity analytics. The trustees were advised by CMS, while Eversheds Sutherland advised Legal & General.
SHEPS chairman Graham Laughland said the collaborative method had saved the firm money.
"I am delighted to have taken this positive steps in reducing risk and improving the security of members' benefits," he said. "Hymans Robertson's and CMS' advice and specialists experience in the buy-in and longevity insurance market were invaluable. Through their efficiency and tailored approach, the scheme was able to save money at each stage of the process.
"I also want to thank the team at PIC who have been proactive in forging a strong relationship with the scheme and have shown a focus on customer service."
SGNPS chairman Richard Tony Fettiplace welcomed PIC's flexibility during the process.
"This deal is great news for the scheme," he said. "Reducing risk over time is an absolute priority for us and it is important to do this in the most cost effective way. We are delighted to complete this buy-in with PIC, who were flexible and innovative in helping the scheme follow this collaborative approach and achieve our aims."
Hymans Robertson partner and lead adviser to the transactions Richard Wellard commented: "It was very rewarding to work with both sets of trustees and to design a package of transactions that delivered such an excellent deal."
PIC senior actuary Tristan Walker-Buckton praised the speed at which the deal was completed.
"Working closely with Hymans and CMS, the trustees were able to move from a decision to go ahead to signing the contract in one of the shortest periods that we have seen," he said. "This is an excellent example of how those pension schemes that are well prepared and well advised can achieve excellent outcomes in the bulk annuity market."
L&G Investment Management managing director of pension risk transfer Chris DeMarco commented: "Our UK-based, longevity pass-through offering enabled the trustees to manage down this risk, while allowing them to benefit from cost efficiencies through our economies of scale and giving them the peace of mind that we will support them well into the future."
CMS partner James Parker said the specialist market knowledge and experience of those involved enabled such "swift and unique" transactions.
Over £5bn of buy-in and buyout deals have been completed since the start of the year, more than double the value in the same period last year.
Insurers and schemes appear to be attempting more innovative solutions, including by combining a buy-in with a longevity swap in this deal, but also the conversion of the Mizuho Capital Markets (MCM) hybrid pension scheme's buy-in to a buyout with just one insurer, which was conducted alongside an advice-led transfer value exercise.
In December, a longevity swap was transformed into a £1.2bn bulk annuity for the PGL Pension Scheme with Phoenix Life, in the first deal of its kind.
Aviva Life & Pensions has concluded an £875m buy-in with its own staff pension scheme, following on from a similar transaction last year.
Just Group has completed a £74m pensioner buy-in with the UK pension scheme of a US-listed engineering business.
The Smiths Industries Pension Scheme has secured a £146m buy-in with Canada Life in its fourth bulk annuity and its sponsor’s tenth overall.
The Prudential Staff Pension Scheme has entered into a £3.7bn longevity swap with Pacific Life Re, insuring the longevity risk of over 20,000 pensioners.
The Baker Hughes (UK) Pension Plan has secured approximately £100m of liabilities through a buy-in with Just Group.