PIC concludes £1.3bn buy-in with Coats Group plc

Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension schemes, has completed a £1.3 billion buy-in of the Coats UK Pension Scheme, which covers pensions of 18,042 Scheme members.

Coats Group plc is a British multinational company described as the world’s largest thread and structural components’ manufacturer for apparel, footwear, and performance materials.

As part of the transaction details, PIC received illiquid assets from the Scheme in exchange for a deferred premium, allowing for timely redemption of remaining illiquid holdings, a move that was made in order to manage the Scheme’s complex illiquid asset holdings.

The transfer of the Scheme’s assets and liabilities to PIC, was facilitated by an upfront contribution from Coats.

The Scheme had previously completed a buy-in in 2022 with Aviva, covering £350 million of liabilities. This latest transaction addresses the remaining portion of the Scheme’s obligations.

Chris Martin, Chair of the Trustee of the Coats UK Pension Scheme, and Executive Chair at Independent Governance Group, said: “This is a significant transaction for the Scheme members, who now all have their pensions guaranteed by a UK life insurance company, and for the sponsor, which has fully de-risked the pension scheme for which it is responsible. The Trustee is delighted to complete the transaction.

“I want to thank PIC for their innovative, flexible approach to addressing the complexity of the illiquid holdings, as well as our advisors LCP, Redington and Sackers for their support throughout. Critical to delivering this outcome and the continuity of service to members has been the outstanding team at the Coats Pensions Office.”

Jackie Callaway, Chief Financial Officer at Coats Group PLC, added: “Shareholder sentiment was overwhelmingly positive following the previous Scheme buy-in and we were therefore very pleased to be able to help facilitate this transaction. Our contribution neatly aligns shareholder interests, by removing sponsor responsibility for the Scheme’s assets and liabilities, with those of Scheme members, who now all have their pensions insured.”

LCP acted as lead transaction consultants. PIC received legal advice from Herbert Smith Freehills.

The Trustees received actuarial advice from LCP, legal advice from Sackers and investment advice from Redington. The company advisors were Isio and Baker McKenzie.

Matt Richards, Head of Origination Structuring at PIC, commented: “We are proud to have been able to complete this complex transaction, demonstrating our commitment to meet trustee needs in challenging circumstances. It was a pleasure to work with Chris and the trustee team on this transaction.

“One notable feature of this transaction was the active support from Coats as sponsor, reflecting their experience of positive sentiment achieved by aligning shareholder and Scheme member interests.”

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