Willis Towers Watson (Nasdaq: WLTW), a leading global advisory, broking and solutions company, today announced that it advised Loblaw on annuity buy-out transactions to lessen financial risk to the organization. The two insurance companies involved in the annuity buy-out transactions were Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies, and BMO Insurance.
"In consultation with Willis Towers Watson, we found a winning combination of conditions that enabled us to reduce the financial risks from our defined benefit pension plans at an attractive price in line with the company's financial objectives," said John Poos, Group Head, Pensions and Benefits, Loblaw Companies Limited.
"We're proud to have worked with Loblaw on an innovative solution to transfer the risks related to some of Loblaw's inflation-linked defined benefit pensions. At around $350 million, this transaction is one of the largest ever completed in the Canadian market," said Marco Dickner, Retirement Risk Management Leader, Canada, Willis Towers Watson.
Brent Simmons, Senior Managing Director, Defined Benefit Solutions, Sun Life Financial, added, "We were delighted to create a cost-effective solution for Loblaw, building on the innovative combined annuity transaction we developed last year. There are many plans in Canada that provide inflation-linked pensions and we believe there are significant opportunities for these plans to transfer risk at an affordable cost."
"Increases in life expectancy and fluctuations in inflation add to the cost uncertainty, and many plan sponsors are looking for affordable ways to de-risk so they can focus on their core businesses while ensuring benefit security for their members," said Rohit Thomas, VP, Chief Pricing Actuary at BMO Insurance.
Under an annuity buy-out, the insurance company assumes responsibility for making pension payments to pension members in exchange for a premium from the pension administrator. The Loblaw transactions are notable because they involved inflation-linked pension benefits, which were rare in the past because they were perceived to be expensive and not readily available from insurers.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 39,000 employees in more than 120 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.
About Loblaw Companies Limited
Loblaw Companies Limited is a Canadian public company. Loblaw has three operating segments: Retail, Financial Services and Choice Properties Real Estate Investment Trust. The Retail segment consists primarily of a discount supermarket business, a full-service supermarket business, an emerging and wholesale business and Shoppers Drug Mart. Loblaw's Financial Services segment provides retail banking, credit card services, auto, home, travel and pet insurance and wireless mobile products and services. Loblaw also holds an 83.0% effective interest in Choice Properties, which owns, leases and manages income-producing commercial properties.
About Sun Life Financial
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth products and services to individuals and corporate customers. Sun Life Financial has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of September 30, 2016, the Sun Life Financial group of companies had total assets under management of $908 billion. For more information please visit www.sunlife.com.
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.
About BMO Financial Group
Established in 1817, and currently marking its 200th year of operations, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of $688 billion as of October 31, 2016, and more than 45,000 employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets. For more about BMO Insurance (a member of the BMO Financial Group) visit www.bmo.com/insurance.