The buy-in, which is essentially an insurance policy deal for pension benefits and will cover over 4,000 of the fund’s pensioner members, is Scottish Widows' largest external bulk annuity transaction to date.
"We are delighted to have been chosen by the trustee of the ICI Pension Fund on this significant buy-in arrangement and look forward to becoming a long term de-risking partner for them," said Emma Watkins, director of bulk annuities at Scottish Widows. "We have worked closely with the trustee and their advisers to develop a bespoke solution over a number of months and this transaction demonstrates Scottish Widows’ ability to provide innovative de-risking solutions to large pension schemes."
Heath Mottram, chief executive of the ICI Pension Fund, added: "This buy-in is the result of significant work by the trustee over the last five months, and further builds on the fund’s strong de-risking foundations. The trustee is delighted to add Scottish Widows to its de-risking panel, further enabling it to continue to improve the security of members’ benefits."
Aon Hewitt's Risk Settlement Market 2016, which was released in May, predicted that this year would be a bumper one for bulk annuity and longevity swap deals, after transactions in the risk settlement market reached £30bn in 2015.
"It's encouraging that, in a growing market, there is scope for multiple insurers to write large transactions," said Dominic Grimley, principal consultant at Aon Hewitt, of today's announcement. "At least four insurers have written £500m-plus transactions now in 2016, taking on risks from company pension schemes or purchasing existing books of annuities.
"This is not hampering competitive pressure for schemes currently approaching the market, with attractive pricing available. We still see significant capacity for annuity transactions in the second half of the year, following a quiet start to 2016."