The UK’s insurance sector continues to seek physical assets as two leading life insurers secure multimillion infrastructure investment deals.
Legal & General will invest £65 million in the Newcastle Science Central while Pen
sion Insurance Corporation (PIC) will put £100 million into debt secured on the Thames Tideway Tunnel, the Financial Times
The Newcastle Science Central is a £350 million science and technology park while the Thames Tideway Tunnel is a £4.2 billion “super sewer” that is expected to be completed in 2023.
Such infrastructure assets offer long-term cash flows to meet insurance companies’ extended liabilities. This is critical for firms such as Legal & General and PIC, the Financial Times
Compared to government or corporate bonds, infrastructure assets can also offer better returns, the report added.
“There are not many assets that go out beyond 30 years,” Allen Twyning, head of debt origination at PIC, told the Financial Times.
“There are not an awful lot of options for pension funds and insurance companies. Infrastructure credit is the ideal asset to back long-term liabilities.”
PIC’s investments in the Thames Tideway Tunnel stretch out as far as 2054 and offer yields of 1% over inflation, according to the report.
For Legal & General chief executive Nigel Wilson, their investment in infrastructure shows the power “bulldozer money” to generate jobs in the north of England.
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