BP Negotiates With Insurers for GBP 30 Billion Pension Scheme
BP plc BP is in negotiation with several insurers about an insurance contract for its £30 billion ($38.2 billion) final salary pension fund as higher interest rates allow businesses to offload liabilities, as reported by Financial Times.
According to the report, trustees for BP's U.K. defined benefit plan, which has more than 60,000 members, are in discussions about a "buy-in deal" that might end up being the largest in the industry’s history.
Higher rates lifted many corporate pension plans to surplus after more than a decade, wherein their bond portfolios provided poor returns. This sparked a market for corporate pension deals, in which schemes pay insurers to assume the responsibility for some or all of the pension promises made to employees.
Since rating agencies can classify pension payments as liabilities, a move like this might help BP boost its credit rating, according to energy analysts. S&P rates the company’s long-term credit as A, which increases the cost of borrowing for the business. A surplus of at least $4 billion stood idle at 2022-end in BP's U.K. final salary scheme, which has been closed to new members since 2010.
Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).
Some better-ranked stocks in the energy sector are Evolution Petroleum Corporation EPM, NGL Energy Partners LP NGL and RGC Resources Inc. RGCO. While Evolution Petroleum sports a Zacks Rank #1 (Strong Buy), both NGL Energy Partners and RGC Resources carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum is an independent energy company. It was formed to acquire and develop oil and gas fields and apply both conventional and specialized technology to accelerate production, particularly in low-permeability reservoirs. EPM has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 60 days.
NGL Energy Partners, headquartered in Tulsa, OK, is a limited partnership operating a vertically-integrated propane business with three operating segments — retail propane, wholesale supply and marketing, and midstream. NGL has witnessed an upward earnings estimate revision for 2024 in the past 30 days.
RGC Resources is a holding company that offers energy and associated products and services through its operational subsidiaries — Roanoke Gas Company and RGC Midstream, LLC. RGCO has thousands of customers through its natural gas distribution companies that serve the Roanoke Valley and Bluefield, Virginia and West Virginia areas.
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