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CMS advises LV= Employee Pension Scheme on £800m buy-in and longevity swap conversion

28 July 2020

International law firm CMS has advised the Trustee of the LV= Employee Pension Scheme on the conversion of a longevity swap held with ReAssure (reinsured by Swiss Re) into an £800m buy-in with Phoenix Life. This represents a significant de-risking step for the LV= Employee Pension Scheme. 

CMS was appointed by the Trustee as transaction legal counsel to provide specialist advice on the transaction. The firm worked closely with Redington, who provided investment advice to the Trustee, and LCP, who advised both the Trustee and corporate sponsor. 

The collaboration yielded a particularly efficient process, the swap conversion allowed the Trustee to capture attractive buy-in pricing, benefitting from the asset-sourcing expertise of Phoenix Life, a UK-regulated life insurer. The conversion will protect the Scheme from market, longevity and other demographic risks.

The CMS team was led by James Parker, partner in the CMS Pensions Team, and supported by Pensions associates Doyin Olugbemiga and Victoria Mance. 

Commenting on the transaction, James Parker said: “CMS is a market leader in pensions de-risking market. Our team has particular experience in swap conversions, having advised on five out of the seven that have taken place to date. The depth of our experience was an important contributor the success of this deal, enabling CMS, BESTrustees, LCP and Redington to deliver a smooth, innovative and efficient process from start to finish, despite market volatility.”

The last twelve months have been particularly busy for the CMS De-Risking Team, having advised on 8 of the 10 buy-in/out deals over £1 billion in 2019, as well as many of the recent longevity swap transactions, including acting for a FTSE100 trustee on the first “Enhanced Pass-Through” transaction with Zurich, as well as for Pacific Life Re on the £10 billion transaction with the Lloyds Banking Group pension scheme.