LCP advises on £1.1 billion buy-in between Legal & General and the SCA UK Pension Plan

LCP acted as lead adviser on a £1.1 billion buy-in deal between Legal & General Assurance Society Limited (“Legal & General”) and the SCA UK Pension Plan (“the Plan”), securing the benefits of 5,900 retirees and 3,600 deferred members. LCP advised the Trustee on all aspects.

The sponsoring company, Essity Holding UK Limited (“the Sponsor”), is part of the Essity group which is a leading global hygiene and health company headquartered in Stockholm, Sweden. Essity employs approximately 1,600 employees in the UK across six manufacturing sites and three commercial offices. Its portfolio of brands include TENA, Cushelle, Tork, Plenty, Velvet and Bodyform.

Following a review of the insurers in the market, the Plan and Sponsor chose to work in partnership with Legal & General to achieve their transaction objectives, with Legal & General providing certainty and transparency about its pricing and terms.

Legal & General has a long-standing relationship with the Plan, which has been a client of L&G’s Asset Management division for 31 years. This transaction demonstrates progress on the Group’s new growth strategy, announced in June, drawing on the synergies between its business divisions to support its ambition to write c.£50bn of UK PRT over the next five years. In 2023, Legal & General wrote £13.7bn of PRT, globally.

The transaction represents an innovative step forward in the PRT sector, enabling the Plan to optimise its investment strategy to closely align with Legal & General’s pricing. The Plan was able to agree a price lock and premium payment portfolio with Legal & General which aligned with the Plan’s assets. This included its asset management pooled fund holdings, which were novated to Legal & General, creating cost certainty during the transition process.

Clive Wellsteed, Partner and Lead Transaction Adviser, LCP:

“One of the most important decisions in today's market is how to approach and engage with insurers to best deliver the transaction objectives. The bespoke process followed here did exactly that and delivered highly competitive pricing and full tailoring to the Trustee’s and Sponsor’s timeline and desired terms.

Andrew Kail, CEO, Legal & General, Institutional Retirement, added: "We are very pleased to have agreed this buy-in today with the SCA UK Pension Plan, allowing us to deepen our existing relationship with the client and create greater security for its members. We are continuing to see an acceleration in demand across the sector with c£1.4 trillion of DB pension scheme assets sitting on UK company balance sheets. Our long-standing relationships with clients, through our Asset Management division, allows us to support pension schemes through their de-risking journey, working in collaboration with clients such as the SCA UK Pension Plan to maximise outcomes for Plan members and Trustees.”

Carol Woodley, Chair and Independent Trustee Director, SCA UK Pension Plan, said: “I’m delighted that the Trustees, Essity, Legal & General and our advisers have been able to work together to complete this transaction. It is good news for our members and increases the level of security that their pension benefits will be paid in full. The outcome was only possible in the time frame as a result of the great team effort between everyone involved.”

Slaughter and May provided legal advice and Muse Advisory acted as pensions manager. Willis Towers Watson and Clifford Chance advised the Sponsor. CMS Cameron McKenna Nabarro Olswang LLP supplied Legal & General with legal advice.