Legal & General lifts pensions risk transfers to £8.4bn

Legal & General has bought out the £2.4bn Nortel Networks UK pension plan, taking its pensions transactions to a record £8.4bn for the year for its pension risk transfer business.

Nortel UK plan, which covers 15,500 pensioner members and around 7,200 deferred members, has been without a sponsor since 2009 when it was assessed by the Pension Protection Fund while insolvency proceedings were ongoing.

L&G said the financial metrics and Solvency II capital strain of this transaction are in line with previous levels it has reported.

Group chief executive Nigel Wilson said the UK and international pipelines are "stronger than we have ever seen", with £25bn currently in active pricing discussions in the UK alone.

"The Nortel transaction illustrates the diverse range of situations to which buy-ins and buyouts can provide solutions to enhance outcomes for members, scheme sponsors and in this case the PPF: as the PRT market grows in volume, we also expect it to grow in diversity."

Shares in L&G were up 0.6% to 259.97p on Monday morning, still down around 4% in 2018.

"L&G remains the market leader in pension risk transfer and is able to utilise the strengths of its asset management and capital development businesses to generate long-term assets well matched to the liabilities it takes on," said analyst Paul De’Ath at Shore Capital.

"This potentially makes the deals more profitable for L&G than its peers, in our view."

With the PRT business running through the whole of the group's operation, De'Ath said delivery on this deal at terms similar to previous levels reported "should provide another strong earnings boost for 2018".