Press release: Wellington Management to manage £700 million US municipal bond mandate for PIC
We are pleased to announce that Wellington Management has been appointed to manage a £700 million US municipal bond mandate for Pension Insurance Corporation (PIC). PIC cited Wellington’s municipal bonds, ESG and climate risk expertise as factors in their decision. PIC views municipal bonds as an attractive opportunity set, and we believe this allocation has strong growth potential.
London, 18 November 2020 – Pension Insurance Corporation plc (PIC), a specialist insurer of defined benefit pension funds, has appointed Wellington Management to manage its US municipal bonds portfolio. PIC has approximately £700 million invested in taxable US muni bonds, out of a total portfolio of £47.7 billion1.
Wellington’s long and successful track record of building relationships with insurance clients, excellence in research and strong integration of environmental, social and governance (ESG) considerations into its investment processes were key to this mandate win.
PIC has invested in muni bonds since 2016, a fixed income sector that provides access to high-quality borrowers with a record of rating stability and low defaults, which are desirable characteristics to match PIC’s long-term liabilities. Muni bonds provide a valuable complement to PIC’s corporate credit holdings, and it is expected that the allocation to this sector will continue to grow over time. The size and potential growth in this mandate drove the decision to appoint a specialist to manage this sector on a standalone basis.
Wellington joins PIC’s existing panel of best-in-class fixed income managers, alongside Janus Henderson Investors, J.P. Morgan Asset Management, Schroders Investment Management and 24Asset Management.
Rob Groves, chief investment officer at PIC, said: “We are very pleased to have appointed Wellington, not only for its expertise in the US muni bond market, but also for its ESG and climate risk expertise. These are particular areas of focus for us and we will continue to develop our expertise in this area with help from our expert managers.”
Daniel Poole, portfolio manager at PIC, said: “Having completed an extensive search and selection process, we are delighted to appoint Wellington. Wellington shares many of PIC’s values, such as being a team and putting customers’ interests at the heart of the decision-making process. This is a great foundation to build a partnership on.”
James Bradbury, relationship manager at Wellington, said: “Wellington Management is delighted to partner with PIC, and we look forward to working together to help meet the pension needs of its current and future policyholders. We have an established position in the municipal bond market and access to bonds that will offer diversification and long-term cashflows to PIC’s clients.”
Bob Sharma, head of the EMEA insurance teamat Wellington, said: “We believe PIC’s policyholders will benefit from our differentiated work on climate risk, where we use our climate research to mitigate the impact of physical climate risk on long-dated assets held in the portfolio.”
1 Total portfolio size at 30 June 2020
About Pension Insurance Corporation
The purpose of Pension Insurance Corporation (“PIC”) plc is to pay the pensions of its current and future policyholders. PIC provides secure and stable retirement incomes through leading customer service, comprehensive risk management and excellence in asset and liability management. At half-year 2020, PIC had insured 237,600 pension scheme members and had £47.7 billion in financial investments, accumulated through the provision of tailored pension insurance buyouts and buy-ins to the trustees and sponsors of UK defined benefit pension schemes. Clients include FTSE 100 companies, multinationals and the public sector. PIC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (FRN 454345). For further information please visit www.pensioncorporation.com
About Wellington Management