MNOPF insures extra £400m of liabilities with PIC buy-in

Deal is the latest phase of the scheme’s de-risking journey

Jonathan Stapleton
clock • 2 min read
Rory Murphy: This buy-in is a further key stage in our long de-risking journey
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Rory Murphy: This buy-in is a further key stage in our long de-risking journey

The Merchant Navy Officers Pension Fund (MNOPF) has completed an additional £400m buy-in with Pension Insurance Corporation (PIC).

MNOPF - an industry-wide scheme established in 1937 to allow shipping companies to provide retirement and death benefits for their officers - said the deal represented the benefits of around 2,000 pensioner members.

The deal builds on MNOPF's previous £1.6bn transaction with PIC, completed in February 2020, in which the scheme secured the pensions of around 14,000 members by converting a longevity swap it held with Pacific Life Re. It also follows a string of buy-in deals completed with Rothesay Life and Legal & General (L&G) and the scheme's £1.3bn old section buyout in 2015.

MNOPF chair Rory Murphy said: "This buy-in is a further key stage in our long de-risking journey. This buy-in helps to provide greater certainty to members about the security of their benefits and we are delighted to have completed it with PIC, who we know well from our existing transaction."

PIC head of origination structuring Uzma Nazir added: "We worked closely with the trustee over several months to actively monitor market conditions and ensure that we were able to transact quickly once market conditions were favourable. We were proud to complete the original buy-in with the MNOPF and are delighted that we have been selected as their partner once again."

WTW advised the trustee on the deal. Director Nadine Reid explained: "We are very pleased to help the trustee to secure another buy-in for members of the MNOPF, extending their partnership with PIC. The MNOPF trustee is dynamic and open to innovation, which has enabled them to secure another important de-risking step by seizing a transaction opportunity when it arose."

The MNOPF's risk reduction journey

Transaction overview
Date completed
Description
£500m buy-in with Lucida (now L&G) 2009 Fully collateralised buy-in
£100m buy-in with Lucida (now L&G) 2010 Top-up buy-in done via a side letter 
Balance of MNOPF old section buy-in with Rothesay Life, covering all risks for the £1.3bn scheme 2012 The market's first all-risks buy-in
£1.6bn longevity swap for the MNOPF's new section 2014 First to use a Guernsey-based captive specially created by WTW to assist clients in accessing reinsurers. Specifically set up for ease of flipping to a buy-in within five years
£25m uplift and £1.3bn old section buyout 2015 An administration consolidator was established to streamline pension payments and administration practices for all old section members covered by multiple buy in providers and new section members
£500m with L&G 2017 Opportunistic pensioner buy-in secured strong pricing available at the time
£1.6bn buy-in with PIC 2020 Novation particularly quick and efficient because the 2014 longevity swap was structured through a Guernsey-based captive
£400m buy-in with PIC 2022 £400m buy-in representing the benefits of around 2,000 pensioners

 

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