Carey Olsen has advised on an innovative captive assisted value share bulk purchase annuity (BPA) transaction with M&G.
The transaction involved the issue of a c£500 million BPA contract by M&G’s wholly owned subsidiary, The Prudential Assurance Company (PAC), to a UK pension trustee. As with a traditional buy-in transaction, under the BPA, PAC insures the trustee’s liability to its pension scheme members.
In addition, a newly formed Guernsey captive reinsurer was established by the corporate sponsor of the pension scheme. The captive reinsures a portion of PAC’s exposure, thereby enabling the sponsor to participate in both the upside and the downside of the buy-in transaction alongside PAC.
The transaction is the first of its kind to be completed under M&G’s Value Share Bulk Purchase Annuity proposition.
The Carey Olsen Guernsey corporate team advising comprised partner Christopher Anderson (pictured), and senior associates Arya Hashemi and Vaishali Gupta. PwC advised the corporate sponsor on the buy-in and captive implementation and CMS provided legal advice to the sponsor. The trustees were advised by Mercer and Macfarlanes, and Eversheds provided legal advice to M&G. The captive is managed by SRS Management Guernsey Limited.
Christopher Anderson said: “Guernsey is well established as Europe’s leading domicile for captive insurance and highly regarded internationally for its proportionate, risk-based regulatory regime. We are delighted to have advised on this transaction – particularly as it is the first of its kind in the UK.”
