It was announced today that Eversheds Sutherland and Mercer have advised the Irish DB pension schemes of a leading global corporate on an innovative €450 million captive annuity transaction with AXA France Vie. 

The transaction, which closed in December and covers more than 650 members, is the largest Irish pension risk transfer transaction of 2016.

The transaction is structured as a rolling buy in covering all accrued liabilities under the schemes with top up insurance to be purchased on an annual basis.

The insurance contract which is designed to operate for 60 years is fully reinsured by a captive insurer within the sponsor group. Given the long-term nature of the contract, innovative risk management and asset management mechanisms were put in place as part of the structure. A similar transaction was executed by the corporate’s UK pension scheme in parallel.
 
Commenting on the deal, John O’Brien, Principal, Financial Strategy Group, Mercer said, "This was a very innovative multi-geography captive annuity transaction and creates market precedent for multi-national corporates seeking to own and efficiently manage the financing of their global pension benefits in a manner that speaks to the objectives of local trustees."

Source: www.businessworld.ie