A UK pension scheme has completed the first value-sharing buy-in to use a Guernsey-based captive reinsurer.
M&G, through its subsidiary The Prudential Assurance Company (PAC), insured £500 million of liabilities for 3,200 pensioners and deferred members.
The transaction was arranged with a private corporate sponsor and allows the sponsor to share in both the risks and returns.
A Guernsey captive reinsurer, managed by SRS Management Guernsey, assumed part of PAC’s exposure.
This structure enables trustees to secure member benefits as with a standard buy-in, while giving the sponsor a financial stake in the outcome.
Carey Olsen advised on the captive structure, with partner Christopher Anderson and senior associates Arya Hashemi and Vaishali Gupta leading the team.
“Guernsey is well established as Europe’s leading domicile for captive insurance and highly regarded internationally for its proportionate, risk-based regulatory regime,” says Anderson.
“We are pleased to have advised on this transaction, particularly as it is the first of its kind in the UK.”
PwC and CMS advised the sponsor, while Mercer and Macfarlanes supported the trustees. Eversheds provided legal counsel to M&G.
