NEARLY £4 billion of defined benefit liabilities in the pension fund of former Scotch whisky distiller Allied Domecq have been insured, writes Scott Wright.
The £3.8bn deal has been hailed by insurer Rothesay Life as the largest scheme buy-in on record that incorporates deferred members. The insurance policy secures the majority of the scheme’s liabilities.
Allied Domecq was an international drinks business whose brands included whisky brands Ballantine’s, Teacher’s and Laphroaig. It was acquired by drinks giants Pernod Ricard and US-based Fortune Brands for £7.4bn in 2005, which carved up the Allied portfolio between them.
The Allied Domecq Pension Fund has more than 27,000 members, including around 17,000 pensioners and 10,000 deferred members.
Rothesay said its buy-in significantly de-risks the fund by passing future investment and longevity risks to the insurer. Its shareholders contributed a further £200 million of new equity, in addition to the £500m announced earlier this month, in anticipation of the Allied deal and further opportunities it is targeting in the defined benefit bulk annuity market.
The Allied fund will continue to hold some residual assets to support ongoing running costs, and to pay any pension benefits not covered by the policy.
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