Legal & General agrees huge insurance deal with BAE Systems

FTSE 250-listed financial services company Legal & General has put in place a longevity insurance arrangement for defence and aerospace company BAE Systems' 2000 Pension Plan.

FTSE 250-listed financial services company Legal & General has put in place a longevity insurance arrangement for defence and aerospace company BAE Systems' 2000 Pension Plan.

The deal is the largest such arrangement ever completed in the UK.

The arrangement insures the plan against the financial risk of its 31,000 current pensioners living longer than expected, covering a total of £2.7bn of liabilities as measured by the plan, or £3.2bn discounted at LIBOR.

Legal & General will retain 30% of the longevity risk, with the remainder being reinsured by Hannover Re.

Nigel Tinsley, Group Pensions Director at BAE Systems, said: "We are pleased to have worked with Legal & General and Aon Hewitt to develop this innovative approach to managing risk exposure within the BAE Systems 2000 Pension Plan.

"This arrangement offers us a flexible approach to managing the key risk of longevity in the plan. We are particularly pleased that we were able to complete the process in a structured and straightforward fashion within six months."

Legal & General's share price contracted 0.89% to 155.20p at 09:55 on Thursday.

MF

Recommended

I wish I knew what a share buyback was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what a share buyback was, but I’m too embarrassed to ask

A share buyback means just what it says – a company buys back its own shares. But why? And how does that benefit shareholders?
3 Aug 2021
Improve your odds of investment success with these three stocks
Share tips

Improve your odds of investment success with these three stocks

Professional investor Tom Wildgoose of the Nomura Global High Conviction Fund highlights three of his favourite stocks.
2 Aug 2021
How to profit from pampered pets beyond the pandemic
Share tips

How to profit from pampered pets beyond the pandemic

Covid-19 has greatly boosted ownership. But the market had been expanding for years, and demographic, cultural and medical trends all point to long-te…
30 Jul 2021
Share tips of the week – 30 July
Share tips

Share tips of the week – 30 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
30 Jul 2021

Most Popular

Why the UK's 2.5% inflation is a big deal
Inflation

Why the UK's 2.5% inflation is a big deal

After years of inflation being a financial-assets problem, it is now an “ordinary things” problem too, says Merryn Somerset Webb. But central banks st…
16 Jul 2021
The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021