Prudential announces completion of its first longevity reinsurance transaction

by Artemis on June 1, 2011

Prudential Retirement has announced the completion of its first longevity reinsurance transaction. The transaction sees Prudential provide reinsurance to UK based Rothesay Life, a subsidiary of Goldman Sachs, covering pension account longevity risks to a value of UK£100m (approx $160m).

“Plan sponsors face significant uncertainty and exposure to pension risk,” said Amy Kessler, senior vice president and head of Prudential’s longevity reinsurance effort. “Prudential’s role as a reinsurer of longevity risk helps increase the security of the promise pension plans offer to participants around the world. Providing longevity reinsurance for insurers in the United Kingdom is one more example of how we’re helping to create retirement security through innovative solutions and strong partnerships. This transaction is another step in further developing our pension risk transfer business.”

“Rothesay Life is delighted to have partnered with Prudential to complete its first U.K. longevity reinsurance transaction and believes that this success marks the beginning of an important long-term relationship in the pension insurance sector,” said Addy Loudiadis, chief executive officer, Rothesay Life.

Prudential recently announced completion of the first pension buy-in transaction in the U.S. With Prudential assuming a large amount of longevity risk from these deals it is possible that we could see them seeking to transfer those risks to investors through capital markets longevity risk transfer transactions in the future.

Rothesay Life have themselves been involved in one of the largest pension buy-in deals to date.

The full press release from Prudential can be found here.

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