RSA

On 14 July 2009, Royal Sun Alliance (“RSA”) and Rothesay Life announced the completion of a transaction involving insurance of £1.9bn of pension liabilities of the two UK pension schemes of RSA Insurance Group plc (RSA), fully eliminating any longevity, inflation and interest rate risk associated with over 55% of the total current pensioner benefits.

This was the largest ever Buy-In in the UK longevity market.

The transaction was structured as an insurance contract, under which the trustees retain ownership of the assets, comprising gilts and UK government guaranteed bonds.

The transaction constituted the latest stage of a derisking programme undertaken by RSA to remove the risk of increased cash funding for the obligations and protects RSA’s balance sheet and capital positions by reducing the volatility of the pension position.

Furthermore, the transaction mitigates the sponsor covenant risk while retaining a very strong security arrangement for the Schemes. No additional contributions were required by RSA into the Schemes as a result of the transaction.