LCP advises on £1.1 billion full buy-in between Legal & General and Deutsche Bank Pension Scheme

LCP was lead adviser on a £1.1 billion full buy-in between Legal & General Assurance Society Limited (“Legal & General”) and the DB (UK) Pension Scheme (“the Scheme”), securing the benefits of around 4,000 members.

The Scheme is sponsored by a subsidiary of Deutsche Bank AG (“the Bank”) and is a longstanding client of Legal & General’s Asset Management division. This is the Scheme’s third buy-in with Legal & General following a £570 million buy-in announced in 2021 and a £500 million buy-in in 2023, and brings the total of insured liabilities with Legal & General to £2.1 billion. 

The Scheme benefitted from a previous umbrella agreement with Legal & General, which ensured a smooth agreement of commercial terms. It has successfully implemented a phased buy-in strategy over the last four years to fully insure all accrued benefits with the facility to accommodate new benefits for the 250 active employee members as they accrue additional service.  

Continued momentum in UK PRT market

Activity in the UK PRT market has been robust in 2024, with appetite expected to remain elevated into 2025 and across the next decade. At its 2024 Half Year Results, Legal & General reported that it had written or was in exclusive negotiations on £5 billion of PRT transactions. The transactions that were in exclusive negotiations are now complete and include three buy-ins with other pension schemes totalling £2.3 billon. Legal & General’s buy-in with the DB (UK) Pension Scheme is in addition to the figure reported in the Group’s 2024 Half Year Results.

In June, Legal & General announced its new growth strategy and intention to write c.£50-65 billion of UK PRT by the end of 2028. In the third quarter of 2024, Legal & General completed 12 transactions, 8 of which were with clients of its Asset Management division.

Charlie Finch, Partner, LCP: “This is a textbook example of a successful phased buy-in strategy. It has been a privilege to support the Trustee and Deutsche Bank on the journey to reach full insurance across four buy-ins and materially ahead of plan. We have worked with the Scheme since 2018 to design the strategy and produce a roadmap that met all parties’ objectives. The preparation work and strong insurer relationships have been fundamental in allowing the Scheme to execute buy-ins at highly attractive pricing and move quickly to complete a complex final transaction.”  

Andrew Kail, CEO, Institutional retirement, Legal & General:
“As a long-standing client of both our Institutional Retirement and Asset Management division, we are pleased to mark the completion of the DB (UK) Pension Scheme’s de-risking journey, securing its remaining members’ benefits.” 

Our robust capabilities in Pension Risk Transfer and Asset Management are central to the Group’s new growth strategy, and this latest transaction is a further demonstration of how our synergistic business model can benefit clients, customers, and shareholders.” 

Michael Wrobel, Chair of the Trustee Board, DB (UK) Pension Scheme: 
“We are delighted to have completed this full buy-in of the Scheme’s liabilities with Legal & General to further improve the security of members’ benefits. The Scheme has reached its long-term target significantly ahead of the plan we set in 2018.  The existing relationship with Legal & General has been fundamental in helping us achieve this and allowed us to move quickly to lock in attractive pricing for this and previous transactions.”

Jeremy Sowden, Head of Global Pension and Benefits, Deutsche Bank AG:  
“This latest transaction means that all accrued benefits across our two UK Schemes have now been insured removing over £3bn of pension risk. This is an excellent result for the members, the Trustee and the Bank. Our collaborative working relationship with the Trustee and its advisers has been key to the successful and efficient implementation of the plan.  The Bank and Trustee took the opportunity presented by market conditions to fully insure accrued liabilities much earlier than previously planned and the resulting successful transaction represents an important milestone in our global strategy to manage defined benefit scheme risk.”

Transaction legal advice was provided to the Trustee by CMS. DLA Piper UK LLP provided legal advice to Legal & General.