ADIA buys stake in Pension Insurance Corp

The Abu Dhabi Investment Authority (ADIA) has agreed to buy a 21.4 percent stake in Pension Insurance Corporation (PIC), a GBP25 billion UK insurance group, which acquires closed company pension funds.

ADIA has bought the stake from the private equity group JC Flowers, which was one of the founding investors in PIC when it was set up by the financier Edmund Truell in 2006.

In a statement, Hamad Shahwan Aldhaheri, executive director of ADIA’s private equity department, said: “PIC has proven its ability to respond to the growing trend for UK companies to de-risk their defined benefit pension obligations and, as such, has strengthened its position as the industry’s leading pension insurance provider.”

The Abu Dhabi sovereign fund joins a select group of international finance players with interests in the small but profitable market. It has emerged as the second-largest shareholder in PIC, after the Swiss investment fund Reinet, which holds 43.5 percent.

PIC’s other backers include private equity firm CVC Capital Partners, the Chinese investment group Legend Holdings, the Dubai investment firm Istithmar World, and the reinsurance giant Swiss Re.

One of PIC’s principal rivals in the market, Rothesay Life, is also backed by a group of large private investors — private equity giant Blackstone, Singaporean sovereign fund GIC and the US insurance group MassMutual.

Most of the other pensions buyout players are UK insurance groups such as L&G, Scottish Widows, Aviva or Just Retirement. But Truell returned earlier this year with a new venture, the Pensions Superfund, which has a slightly different business model, targeting less well-funded pension schemes.