Bloomberg News

Legal & General Agrees to $1.8 Billion Annuity Deal With T&N

October 25, 2011

(Updates with plan membership in fifth paragraph.)

Oct. 25 (Bloomberg) -- Legal & General Group Plc, the biggest investor in the U.K. stock market, agreed to take on the liabilities of the T&N Retirement Benefits Scheme in return for 1.1 billion pounds ($1.8 billion) of assets.

Current and future plan members should see “no immediate change” to the way payments are made, the London-based insurer said today in a statement. Legal & General also bought 390 million pounds of reinsurance to protect against pensioners living longer than expected from Reinsurance Group of America Inc.

The T&N deal is the biggest ever agreed by Legal & General, which has focused on smaller transactions in the 25 years it has been selling bulk purchase annuities. Under such a plan, an insurance company agrees to pay retirees’ pensions in exchange for the pension assets.

“This transaction demonstrates Legal & General’s ability to win large-scale bulk annuity business,” Tom Ground, head of business development at the insurer’s annuities unit, said in the statement.

The plan relates to collapsed car-parts manufacturer Turner & Newall, the U.K. unit of Federal-Mogul Corp. The pension has 30,000 members, according to Legal & General.

Turner & Newall, founded in 1920, manufactured asbestos and asbestos products, which causes a fatal form of lung cancer. Federal-Mogul purchased the company in 1998 and sought Chapter 11 bankruptcy protection in 2001 because of asbestos liabilities and declining revenue.

“The scheme’s financial position is such that it remains unable to pay members’ full original pensions,” Tim Culverhouse, managing director, Alexander Forbes Trustee Services Ltd., sole trustee of the plan said in the statement. “I regret that there is no real prospect that the scheme could ever have sufficient assets in the future to provide members with a larger pension than Legal & General will provide.”

--Editors: Francis Harris, Steve Bailey

To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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