ScottishPower UK PLC (a wholly-owned subsidiary of Iberdrola SA) and the Trustee of the ScottishPower Pension Scheme (the “Trustee”) announce today that they have agreed and closed a longevity insurance swap with Abbey Life Assurance Company Limited (“Abbey Life”, a wholly-owned subsidiary of Deutsche Bank).

The longevity swap hedges the risk of increases in pension liabilities that would arise if the Scheme’s pensioner members were to live longer than currently budgeted. The hedge covers circa £2,000 million worth of pension liabilities, representing the pension liabilities of around 9,000 members and contingent dependents.

The removal of this risk via the longevity insurance swap is another step in the management’s and the Trustee’s strategy to manage the risk and uncertainties linked to the Scheme.

Sheila Duncan, Human Resources Director at ScottishPower commented: “We are extremely satisfied with the completion of this hedge at an attractive price. This transaction demonstrates Iberdrola’s commitment to the security of the benefits of our pension scheme members and reduces risks at group level as part of our ongoing strategy of pension risk management.  We are particularly pleased that the transaction was concluded within the provisions of the Scheme’s existing funding reserves, thus not requiring additional cash contributions.”

Peter Thompson, Chairman of the Trustee, said: “The Trustee is delighted with the outcome of this transaction after months of work with Iberdrola, our advisers led by Mercer, and Abbey Life.  We are pleased to protect against this uncertainty in the scheme, thus providing increased security to our members.”

ScottishPower Press Office: 0141 614 4660