Pensions insurance specialist and Cricket England sponsor Rothesay has been revealed as the counterparty in NatWest Group PLC (LSE:NWG)’s record-setting £11 billion pension de-risking transaction.
Sky News disclosed the buyer in a report citing “several people familiar”.
NatWest initially disclosed pension risk transfer (PRT) in its third-quarter earnings, stating that “around a third of the Main section (of the group pension scheme) is now covered by insurance policies”.
Although the high-street lender did not disclose the deal’s value, the asset size of the NatWest Group Pension Fund’s Main section was cited as £33.6 billion in its 2023 annual statement.
NatWest confirmed the deal to Sky, stating: "As part of its long-term strategy, the Trustee of the NatWest Group Pension Fund has recently insured around one-third of the Main section with buy-in policies.
"The buy-in policies are fund investments that further improve the security of member benefits by increasing protection against demographic and investment risks.”
Corporations engage in PRTs with insurance firms to reduce the risk of accruing a pension deficit which will need to be funded from their cash flows.
The NatWest scheme was not in deficit as of 31 December 2023, when liabilities of £26.5 billion fell far short of the £33.6 billion worth of assets.
Corporations will often pay hefty sums to unload pension risk when their schemes are in deficit. Similarly, insurers will pay to take on risk when there is a surplus.
NatWest has not disclosed the specifics of the deal.
