LONDON - Rothesay Life, the Goldman Sachs-owned insurer, said it would insure pension benefits worth 370 million pounds ($623 million) for private equity firm CDC Group Plc, boosting a long-stagnant pensions derisking market.
Over the past few years, British corporates have sought to de-risk their pension schemes through pension buyouts, whereby insurers take assets and liabilities off a company's books and commit to pay future pensions for a fee.
Buy-in deals like this do much the same but keep pensioners tied to their existing scheme.
Under the buy-in arrangement, CDC's assets will be retained by the scheme as collateral and invested in a portfolio of corporate bonds which will provide returns to Rothesay Life.
The returns will cover the cost of pension benefits as they arise, Rothesay said in a statement.
However, such transactions have been few and far between during 2009 as volatile markets have deterred trustees from striking deals.
The arrangement meets our objectives of removing the key risks of investment and longevity, insuring our liabilities... and obtaining collateral, said Nicholas Selbie, chairman of the trustees of the CDC Pensions Scheme.
CDC Group Plc is the British government-owned fund of funds investing in private equity funds focused on the emerging markets of South Asia and sub-Saharan Africa.
Earlier this year, Rothesay Life completed the largest pension buy-in so far with a 1.9 billion pound transaction with the British pension schemes of RSA Insurance Group plc. (Reporting by Raji Menon; editing by Simon Jessop) ($1 = 0.5941 pound)