Michelin Pension and Life Assurance Plan agrees £1.5bn buy-in with Aviva

Written by Sophie Smith

09/10/2024

The Michelin Pension and Life Assurance Plan has agreed a £1.5bn full-scheme buy-in with Aviva, covering the retirement benefits of around 15,000 members of the scheme.

The transaction, which included an in-specie transfer of assets, is the largest publicly announced bulk purchase annuity (BPA) transaction of 2024 so far, and is also Aviva’s largest ever external BPA transaction.

The trustee received advice from XPS Group and legal advice from Pinsent Masons LLP.

As part of its preparation before heading to market, the trustee also worked with XPS to deal with its significant illiquid asset holdings in-house, in order to generate competitive tension and achieve competitive pricing from a number of insurers in the market.

Michelin Pension and Life Assurance Plan chair of trustees, Vincent Dormieux, said: “The trustee is delighted to have improved the long-term security of members’ benefits by completing this buy-in transaction with Aviva.

"I’d like to place on record our sincere thanks to our full advisory team and to the Michelin Group for its support through the process.”

Adding to this, Aviva insurance, wealth and retirement CEO, Doug Brown, said: “This is a significant deal showing the strength of our bulk purchase annuity business in securing good outcomes for pension scheme members.

"We are well positioned to carry out large-scale transactions in addition to our capability in the small and medium scheme market.”

XPS Group head of risk settlement, Stephen Purves, added: “We’re really pleased to have led on this important transaction and to have helped the trustee secure its members’ benefits with Aviva.

"We were always expecting to see lots of large transactions complete in H2 2024 and we developed a strategy to make this transaction stand out in a busy market."

Indeed, XPS pointed out that the outlook for the UK bulk annuity market for 2024 is strong, with total volumes expected to exceed £40bn this year.

It also noted that there are still close to £1.5trn in DB liabilities in the UK, with "significant" demand from pension schemes already building for 2025.

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