Specialist insurer of defined benefit (DB) schemes, Pension Insurance Corporation (PIC) has completed an estimated £2.4bn liability purchase with the trustees of the Philips scheme.
Headquartered in the Netherlands, Philips innovates in the healthcare, consumer lifestyle and lighting sectors. It employs 106,000 employees with sales and services in more than 100 countries.
Herbert Smith Freehills advised PIC. The team was led by partner and global head of employment, pensions and incentives, Alison Brown, alongside senior associate Rachel Pinto.
Brown said the buyout was part of “a continuing trend” of pension schemes and their employers approaching the insurance market to secure scheme liabilities on an ‘all-risks’ basis.
PIC said a key feature of the transaction was the simultaneous reinsurance of the longevity risk by PIC with German reinsurance giant Hannover Re, including an “unprecedented” level of non-retired members.
Jay Shah, head of origination at PIC said: “Increasingly, we are seeing multinational organisations successfully settling their pension obligations through pension insurance arrangements such as this. It is becoming part and parcel of modern commercial thinking.”
The transaction has taken PIC’s new business levels to £35bn this year, with total AUM now sitting higher than £16bn.
Legal adviser to Philips was Slaughter & May, and the Philips trustees were advised by Wragge Lawrence Graham & Co.
