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PensionsFirst announces appointment of Simon Parr and Rob Stuart

Two new senior personnel join rapidly expanding group

PensionsFirst Group LLP today announced the appointment of two new key hires as the business continues its ambitious expansion plans. Simon Parr joins as Finance Director and Rob Stuart as General Counsel. 

The new appointments follow on from the launch of PFaroe^®, the industry changing web-based service for managing DB risk exposure, introduced last month by PensionsFirst Analytics.

Simon was previously Group Financial Controller at IAG-UK, where he managed the central finance function and played a key role in restructuring the UK business. Prior to this, Simon was at Barclays Bank PLC from 1997 until 2007, working in a range of senior finance roles including Head of Finance – Barclays Private Banking Americas; Financial Controller – Barclays Private Bank and Finance Director – General Insurance. Simon played a leading role in the re-launch of Barclay’s general insurance business which became the UK’s fastest growing insurer. Simon’s final role in Barclays gave him responsibility for the Retail Bank’s total insurance profit and loss as Finance Director – Barclays Insurance.  Simon started his career at Price Waterhouse, becoming a member of the ICAEW in 1996.

Rob joins PensionsFirst from MKM Longboat, a multi-strategy hedge fund.  Prior to this, Rob was General Counsel at Imagine Group, the speciality and structured reinsurance firm, which he joined in 2003.  Rob began his legal career in private practice in 1992 at Osler, Hoskin & Harcourt, a leading Canadian business law firm, and later practised in Allen & Overy's International Capital Markets department, from 1999 to 2002.  He is qualified to practise law in New York, England and Wales, and Ontario (Canada).

Commenting on the two appointments, Timothy Lyons, CEO Pensions First Group LLP, said:

"We welcome Simon and Rob to the fast-growing PensionsFirst team. Their extensive experience within the financial markets will add invaluable strength and depth to our infrastructure at an exciting time in the development of PensionsFirst. PFaroe is already set to bring about a fundamental shift in the pensions landscape in the UK, and we have ambitious plans to bring its ground-breaking qualities to a wider global audience.

 "In contrast with much of the financial services industry, we have ambitious expansion plans. We have grown from 22 people in June of this year to over 50 and expect the team to double in size again over the next year with the launch of PFaroe in the US in the first half of 2010. Simon and Rob will play a critical role in managing our company's rapid growth."

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For more information please contact:

Timothy Lyons/Benjamin Reid, PensionsFirst          + 44 207 632 9114 / 9112

Gay Collins/John Sarsfield, Penrose Financial         + 44 207 786 4823 / 4830

Notes to editors:

PensionsFirst

PensionsFirst Group LLP  was launched in November 2007 to provide a unique range of services to the Defined Benefit pensions industry. The PensionsFirst business model is focussed on the concept of ‘journey management’ for DB risk, offering its customers analytics to analyse and measure risk, advisory services to support the management of risk and, where appropriate, capital to support the transfer of risk. The Group comprises two distinct entities – PensionsFirst Analytics, offering risk management analysis and advisory services to the DB pensions industry and PensionsFirst Capital , which provides bespoke investment solutions to DB schemes. PensionsFirst has consistently demonstrated thought-leadership in the DB sector and possesses a highly experienced team with a track record of innovative product development, based on an extensive knowledge of capital markets, pensions and the development of advanced risk analytics.

Benjamin Reid to head up PensionsFirst Analytics

Benjamin Reid has been appointed as Chief Executive Officer of PensionsFirst Analytics, the provider of risk management analytics and advisory services for DB pensions, which this week launched its ground-breaking PFaroe^® service.

Benjamin was a founding partner of PensionsFirst which, since its launch in 2007, has grown to employ some 50 people, a figure expected to double in the next year. The group now comprises two distinct entities – PensionsFirst Analytics, offering risk management analysis and advisory services to the DB pensions industry and PensionsFirst Capital, which provides bespoke investment solutions to defined benefit schemes.

Prior to joining PensionsFirst, Benjamin was a Director at Wachovia Securities in New York where he was responsible for the origination of a broad range of asset financings.  Before joining Wachovia, Benjamin was the US Managing Director of Burgundy Global, a managed services company specialising in corporate strategy and delivering IT-based ground transportation solutions.

Benjamin began his career on the investment desk of Quadrant Capital, an asset management business, investing in high-grade fixed income products.  In 1999 he became a Director of Quadrant and led the company's marketing, business development and distribution until Quadrant sold its operating business to the Bank of New York in 2002.

Commenting on Benjamin Reid's appointment, Timothy Lyons, CEO of PensionsFirst Group LLP, said:

"Given his deep understanding of both capital markets and the critical issues facing managers of DB risk today, Benjamin, with his background in managed services is ideally suited to leading PensionsFirst Analytics and delivering a truly differentiated offering to our customers in the UK and the US.

"With the introduction of PFaroe’s powerful analysis of DB risk exposures, we  believe that PensionsFirst Analytics will help to radically change the way trustees and scheme sponsors manage risk and facilitate their use of much more sophisticated risk transfer solutions."

Benjamin Reid, CEO of PensionsFirst Analytics, added:

"PensionsFirst Analytics has been established to offer a level of sophisticated risk analysis and advisory services that has been lacking in the DB industry. One of the reasons DB schemes have become a major management issue for so many corporate sponsors is because they have lacked the appropriate tools and advisory support to measure and manage risk properly. We live in a digital age with increasing focus on standards of corporate governance and out of date paper based reporting of highly volatile financial exposures is no longer adequate.

"PensionsFirst Analytics will change the way DB pension schemes are run because for the first time we will enable managers of DB risk to properly understand their exposures and present them with an objective view of all their options to mitigate the risks.  I am very pleased to be leading this exciting initiative and feel that we have a great deal to contribute to the industry."

– Ends –

For more information please contact:

Benjamin Reid/Timothy Lyons PensionsFirst  + 44 207 632 9112  / 9114
Andy Fleming/John Sarsfield, Penrose Financial  + 44 207 786 4823 / 4830

www.pensionsfirstanalytics.com

Notes to editors:

PensionsFirst

Launched in 2007, PensionsFirst has a highly experienced team with a track record of innovative product development, based on an extensive knowledge of capital markets, asset management and pensions. In the last two years PensionsFirst has consistently demonstrated thought-leadership in the DB sector, through its pioneering of buy-in solutions and its groundbreaking work on the analysis of longevity. Its business model is based on the concept of ‘journey management’ for DB risk, by offering its customers, analytics to measure risk, advisory services to help manage risk and where appropriate, capital to support the transfer of risk.

PensionsFirst to revolutionise the DB pension industry with actuarial valuations in 24 hours

No more woolly numbers!

In a move set to revolutionise the defined benefit pensions industry, PensionsFirst is launching PFaroe^® , a web-based managed service which will bring new levels of precision to the measurement and management of DB risk. In an industry renowned for opaque and woolly reporting, leaving it increasingly out of step with modern standards of corporate governance, PFaroe offers definition and speed of management information unrivalled by any other provider. 

PFaroe provides clarity, timeliness and definition to the valuation and understanding of the complex area of DB risk - something the industry has lacked for far too long. PFaroe^® does this by generating actuarial valuations within 24 hours, in a clearly presented format supported by detailed and transparent assumptions.  Cashflows are produced at an individual scheme member level and for each scheme asset, allowing users to conduct multiple, user defined scenario analyses. 

PFaroe^® delivers accounting, actuarial and solvency valuations on demand on a 24 hour turnaround, regardless of scheme size.

Despite its sophistication, PFaroe^® is designed for users with no actuarial expertise, enabling them to perform instant sensitivity testing on both assets and liabilities by altering assumptions for longevity, interest rates, inflation and investment mix. It also allows users to conduct standard VaR analysis or scenario testing, and refine benefit design. In addition, because it is web-based and available to sponsors, trustees and consultants, PFaroe^® provides a powerful tool to facilitate consensus in negotiation between the scheme stakeholders.

The launch of PFaroe^® follows a rigorous beta-testing program in conjunction with several leading UK companies, including Aga Rangemaster Group, Alliance Boots, Daily Mail & General Trust and JPMorgan Cazenove.  These schemes account for £8bn of liabilities and 150,000 members. A beta program for selected US customers is scheduled to commence in the first quarter of 2010.

Benjamin Reid, Partner and CEO of PensionsFirst Analytics, said:

"Recent volatility in the financial market has dramatically exposed the fact that the DB industry significantly lags behind modern management practices in other sectors of the financial markets. This is because trustees and scheme sponsors have not had access to the appropriate tools to accurately measure and manage their scheme risks and as a result most pension trustees, CFOs and corporate treasurers lack an accurate picture of the risks to which the sponsoring company’s balance sheet - and therefore its shareholders - are exposed. Quite simply, if you can’t measure risk, you can’t manage it.

"Having developed PFaroe initially to manage our own exposure to DB risk, we have decided to make PFaroe^® available to all managers of DB risk, because we believe it is vital that standards of risk management in the sector are radically improved. PFaroe will provide DB managers, for the first time, with a clear understanding of their risk exposures and it will completely change the way they manage risk."

Comments from beta customers:

“In a few years time we will ask ourselves how we ever managed without a tool like this.”
CEO, beta customer - April 2009
 

 “For the first time, it allows you to have the risk-conversation.”
Pensions Manager, beta customer - May 2009

 “PFaroe borders on the brilliant.”
Pensions Manager, beta customer - May 2009

“Every time I see PFaroe in operation … I wonder how trustees manage their
 schemes without a tool like this.… every trustee board in the land will want it … and it will completely change the way they run their schemes.”
Trustee, beta customer -  June 2009
    
“The availability of detailed and timely reporting on a scheme’s liabilities … bridges the gap for asset managers considering more sophisticated investment
strategies.”
Investment Committee Member, beta customer - September 2009

– Ends –

For more information please contact:

Timothy Lyons/Benjamin Reid, PensionsFirst  + 44 207 632 9114  / 9112
Andy Fleming/John Sarsfield Penrose Financial  + 44 207 786 4823 / 4830

www.pensionsfirstanalytics.com

Notes to editors:

PensionsFirst

Launched in 2007, PensionsFirst has a highly experienced team with a track record of innovative product development, based on an extensive knowledge of capital markets, asset management and pensions. In the last two years PensionsFirst has consistently demonstrated thought-leadership in the defined benefit ("DB") pensions sector, through its pioneering of buy-in solutions and its groundbreaking work on the analysis of longevity. Its business model is based on the concept of ‘journey management’ for DB risk, by offering its customers, analytics to measure risk, advisory services to help manage risk and where appropriate, capital to support the transfer of risk.  

Pensions Insight, 1 January 2010

Fast Forward

PensionsFirst can provide full formal valuations of a company’s pension scheme on a monthly basis, within 24 hours. Many actuarial consultants have expressed criticism of this claim in the belief that this short turnaround time is the result of carrying out “roll-forwards” using potentially outdated assumptions.

However, this is not the case; full and accurate 24-hour valuations are enabled by PFaroe^®, PensionsFirst’s proprietary software package, developed and tested in conjunction with a number of beta customers. Geoffrey Staines, pensions director at DMGT Pensions, one of these beta customers, comments "This is in my view industry-changing software…it allows us to optimise the decision-making on transferring the risk away from our balance sheet to the market. It allows us to ask what-if questions and to really integrate some very deep information into the risk strategy – the kind of information we don't usually have on the table to make these decisions."

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HFM Week, 10 December 2009

People Moves

Rob Stuart has joined PensionsFirst as general counsel from hedge fund MKM Longboat.

Financial News, 07 December 2009

Trading Places - Asset Management

Simon Parr, formerly group financial controller at IAG-UK, has joined PensionsFirst Group as finance director.  Rob Stuart has left multi-strategy hedge fund provider MKM Longboat to become PensionsFirst’s general counsel.

Financial Times (Fund Management supplement), 07 December 2009

Movers & Shakers

PensionsFirst has recruited Simon Parr from IAG-UK as finance director and Rob Stuart from hedge fund MKM Longboat as general counsel.

Pensions Management, 01 December 2009

PFaroe unravels mystery of valuations

PensionsFirst has launched PFaroe, an online asset-liability application for defined benefit (DB) schemes which produces full actuarial scheme valuations within 24 hours. It enables schemes to be analysed at the level of individual members and assets, and is the first system to combine analysis of assets and liabilities together.

Financial News, 23 November 2009
Trading Places

PensionsFirst Analytics has appointed Benjamin Reid as its chief executive. Prior to the launch of PensionsFirst in 2007, Benjamin was a director at Wachovia Securities in New York.

FT Adviser, 19 November 2009
PensionsFirst unveils PFaroe

PensionsFirst has launched PFaroe, web-based service to help manage defined benefit pension risk by analysing and reporting on scheme assets and liabilities on a single risk management platform. It also gives customers the opportunity to receive valuations on funding, accounting or solvency bases within 24 hours.

Click here for the full article>

Professional Pensions, 19 November 2009
PensionsFirst launches web valuation tool for sponsors

PensionsFirst has launched a web-based service – PFaroe – that aims to deliver accounting, actuarial and solvency valuations on demand within 24 hours, regardless of scheme size. The service is designed for users with no actuarial expertise, and enables them to perform sensitivity testing on assets and liabilities, conduct standard VaR analysis and scenario testing. PensionsFirst believes that the tool will help in negotiations between sponsors and trustees.

Pensions News, 17 November 2009
PensionsFirst launches online risk model system

PFaroe, a new web-based service is being offered to schemes, allowing daily asset and liability valuations and reducing reliance on actuaries. It is designed to enable pension scheme managers, trustees and finance directors to make forecasts based on alternative assumptions for inflation, longevity or investment growth. It also has applicability in making pricing decisions for buyouts, buy-ins and longevity swaps, and in costing of one-off enhanced transfer exercises and redundancies.

IPE.com, 16 November 2009
PensionsFirst adapts to launch 24-hour valuations

PensionsFirst has unveiled the first known technology system to deliver actuarial valuations within 24 hours – regardless of scheme size. Most UK pension funds conduct valuations on a triennial as required, but it has so far been impossible to carry out regular checks on asset holdings and strategies, to determine whether improved strategies are possible. The additional functionality is seen as a major benefit by customers testing the system, because it substantially increases their knowledge of their pension plans.

Pensions Week, 16 November 2009
PensionsFirst launches online risk model system

PFaroe, a new web-based service, is being offered to pension schemes, allowing daily asset and liability valuations and reducing reliance on actuaries. It is designed to enable pension scheme managers, trustees and finance directors to make forecasts based on alternative assumptions for inflation, longevity or investment growth. It also has applicability in making pricing decisions for buyouts, buy-ins and longevity swaps, and in costing of one-off enhanced transfer exercises and redundancies.

Professional Pensions (Web), 16 November 2009
PensionsFirst launches web valuation tool for sponsors

PensionsFirst has launched a web-based service – PFaroe – that aims to deliver accounting, actuarial and solvency valuations on demand within 24 hours, regardless of scheme size. The service is designed for users with no actuarial expertise, and enables them to perform sensitivity testing on assets and liabilities, conduct standard VaR analysis and scenario testing. PensionsFirst believes that the tool will help in negotiations between sponsors and trustees.
The service has been tested with a number of companies, with schemes accounting for £8bn of liabilities and 150,000 members.

Click here for the full article>

The Independent (Main), 16 November 2009
PensionsFirst shakes up market

PensionsFirst unveiled a service which could radically shake-up the pension buyout market by enabling companies to get an immediate valuation of the liabilities of their retirement funds. Recent volatility in investment and bond markets has made it almost impossible for company final salary pension schemes to understand their funding position. PensionsFirst can now change this by providing a monthly valuation.
 

Coming soon ....

1. Can you describe what PFaroe is and what it does?

• PensionsFirst Analytics and PFaroe have been established to help companies and trustees to better measure and manage their defined benefit (“DB”) pension risk
• The industry is plagued by an inability to truly understand and report on the inherent risks underlying a DB scheme
• The key reasons for this are:
• Timeliness – liability valuations take a long time to produce and rapidly become   outdated
• Accuracy and transparency – liability valuations too often consist of paper based reports with simply a present value number for the liabilities with no cash flow analysis or detail of assumptions
• Lack of scenario analysis – liability valuations are difficult to stress due to cost and timeliness
• Separate platforms - assets and liabilities are not valued and modelled on the same platforms and there is no ability to run sensitivity analysis on assets and liabilities on a consistent basis
• PFaroe offers customers the ability to model their liabilities and assets on a common platform and to produce detailed cash flows down to an individual member basis for the liabilities and an individual security basis for the assets. This then enables ‘real-time’ scenario analysis on both the liabilities and assets on a consistent basis. Such analysis provides customers with a risk picture and understanding that informs and allows for more sophisticated and appropriate investment strategies

2. How does PFaroe differ from existing risk assessment techniques?

• PFaroe uses the best practises from the capital markets
• Its analysis is based upon detailed cash flows of both the liabilities, down to an individual member level, and the assets on a security by security basis
• It provides customers transparent and timely valuations of both their assets and liabilities and the ability to run alternative and stressed valuations on a ‘real-time’ basis
• The current risk assessment techniques available to DB pension managers do not benefit from this level of detail and more often than not, use outdated aggregate liabilities and a ‘proxy’ for the asset portfolio (e.g. 50% equities; 45% fixed income; 5% alternatives) 

3. Why has no-one come up with this solution before?

• PFaroe has been designed by a unique group of experienced professionals drawn from the capital markets, pensions, insurance and technology industries. This combination of skills has driven an entirely new and radically different approach that understands the need for detail, transparency and ‘best of breed’ risk analysis to be applied to the DB industry
• A similar combination of professionals does not readily exist in the traditional DB service providers and consequently the mindset for such product development has presumably been lacking
• The time is right. There is an increasing demand from regulators and shareholders for better risk reporting and governance of key risks – a standard of excellence which has not previously been applied to DB risk

4. What has been the response of the companies you have trialled the product with? Have you received any negative feedback?

• Hugely positive. There is a genuine belief that PFaroe has changed forever the way they report on and manage their DB risk
• Interestingly, the benefits and opportunities in using PFaroe become greater the more it’s used. The more information and detail that is available, the more analysis can be done and the more knowledge is acquired
• PFaroe has been incorporated into regular presentations to boards and executive committees and forms the foundation for proper MIS reporting

5. How big do you expect the market for PFaroe to be? Do you have other clients in the pipeline?

• The current version of PFaroe is expected to appeal to private DB schemes with liabilities of over £100 million of which there are approximately 730 in the UK
• However, the market for PFaroe is international, with the launch of the US module expected mid way through 2010, and there are over 1,500 US plans with liabilities greater than $200 million
• As well as expanding further geographically, PensionsFirst Analytics will develop an alternative version for smaller (below £100 million) schemes
• The target market for this alternative product is over 7,000 in the UK and over 40,000 in the US
• PFaroe also has application beyond the modelling of DB risk, for example: retiree medical benefits and endowment foundations

6. Is this a bad time to be launching a product of this kind – with global economies in recession and DB schemes closing on a regular basis?

• On the contrary, the current global recession has increased companies’ sensitivity to the risk and volatility exhibited by their DB schemes and has encouraged greater scrutiny from regulators and shareholders around risk reporting and governance of DB risks
• The regular closing of DB schemes is only an indication of how desperate companies are to lock down their exposures. However, closing a scheme does not remove a company’s obligation to pay its previously accrued liabilities. The need to measure and manage risk still remains

7. How much will clients have to pay for this product? Will your client base be limited to larger schemes because of cost considerations?

• There is an initial fee to on-board a client which includes the uploading of all member data and programming of the scheme rules and benefits, as well as a full actuarial valuation reconciled to the scheme’s last valuation. The size of the set-up fee depends upon the complexity of the scheme
• Once on board there is an annual subscription fee which is set according to the size of the scheme
• PFaroe will be appealing to schemes over £100 million in size

8. What happened to the structured product solution you proposed at the time of PF’s launch two years ago? Have you dropped that idea?

• Not at all. The unique methodology we created to deliver the first AAA/Aaa investment products that decrease individual pension plan risk, remains immensely relevant and an integral part of the Pensions First Group business model
• Over time, the majority of corporate sponsors will ultimately seek to migrate their pension risk from their balance sheet and the PensionsFirst investment products are one of the most effective ways to achieve this
• However, our proposition is one of ‘journey management’ and most of the pension plans are at the beginning of the journey
• The journey starts through PensionsFirst Analytics and PFaroe which provide the ability to report on and measure the risk
• Once you can see the risk we can also advise on the best way to manage it
• Ultimately, once you understand the risk, you may decide it is more capital efficient to move the risk to another balance sheet
• At this point PensionsFirst Capital and its AAA/Aaa investment products can be consulted

9. Was there no demand for your initial structured product solution? When was the decision taken to focus on this new strategy?

• There was and remains significant interest in our structured product solution
• In many ways the key characteristics of that approach have been proved right through the events of the past 18 months. Namely, ring fenced collateral and dedicated capital
• While it was always our intention to make our proprietary technology (PFaroe) available for commercial application, the more we understood about the lack of risk measurement tools in the DB industry the more we saw the opportunity
• We first test marketed PFaroe in February 2009 and now have 4 beta test customers and our first commercial customer

10. Who has provided the backing for this venture?

• Our initial funding came from Shinsei Bank and Bill Reeves the founder of Blue Crest Capital Management, one of the most successful hedge funds in Europe
• However, to ensure that we can effectively exploit the enormous opportunity that exists for PensionsFirst Analytics we have now bought in additional growth capital from a Middle East Sovereign Wealth Fund

11. What’s to stop other, bigger players stepping in to provide a similar offering and undermining your business plan?

• We have a unique and highly experienced management team that is drawn from the capital markets, pensions, insurance and technology industries
• This combination has enabled the development of a truly game changing proposition
• Such a breadth of skills doesn’t traditionally reside together in the larger firms
• Additionally, we have had the luxury of being well funded and being effectively an R&D project for two years. This has allowed us to take an approach which is well researched and innovative and which draws upon the best business practises from multiple industry disciplines
• There are not many companies today that would commit the kind of capital required for such a project

12. Have you sought the views of key pension industry opinion formers, and if so, what are their reactions?

• We have deliberately kept PFaroe under the radar screen before our formal launch and have only sought the opinion of our first customers who are of course best placed to determine the value of PFaroe
• The feedback from these initial customers has confirmed that PFaroe will completely change the way in which companies report on and manage their pension risk

13.  Have you sought the views of the Pensions Regulator/PPF, and what were their reactions?

• We have outlined to the PPF our approach to risk reporting and management and we believe their belief in the necessity for proper cashflow risk management is aligned with ours 

14. Have you sought the views of actuaries and employee benefit consultants? The success of PFaroe will presumably have serious implications for them?

• Certainly a number of the Employee Benefit Consultants (“EBC”) are partially aware of PFaroe as we have interacted with them through the on-boarding of some of our first customers but we have not actively sought their opinion
• PFaroe may well have an impact on the scope of the role of the EBCs. Ironically, it may actually increase their advisory work. The more reporting and information is available to pension schemes the more analysis and advice they are likely to seek  

15. What do you envisage the impact of PFaroe will be on existing buy out providers?

• The adoption of PFaroe should have a long term positive impact on the existing buy out providers as it gives pension schemes a far deeper understanding of their risk
• This understanding of risk will ultimately be needed for many schemes to take the decision to de-risk. They will need to understand the capital efficiencies between either holding on to the risk or passing it to an insurance company. Without this many schemes will simply not understand the value proposition of a buy-in/out

16. Where do you see yourself in a year’s time?

• Based upon the high level of initial interest and the enthusiasm of our first customers we anticipate a rapid adoption of the product and would expect to have in excess of 20 pension schemes using PFaroe with a year
• Additionally we will have formally launched the US version of PFaroe towards the end of 2Q10. Indeed we already have identified our first US beta customer

17. Do you see yourself expanding into Europe, North America or other global markets?

• We expect PFaroe to have global application but our core initial focus will be the US and UK markets
• However even some of our first customers, with the desire to report and measure on all their DB risk on one platform, have schemes outside of the US and UK and we will naturally be incorporating these jurisdictions as and when required

18. Have you used any advisors in the set up of PFaroe? If so, could you name them?

• No, PFaroe has been developed in-house at PensionsFirst Analytics without the aid of any external advisors
  

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