Prudential participates in reinsurance of Rolls-Royce longevity swap risk

by Artemis on December 7, 2011

Prudential Financial have announced that they have participated as a reinsurer in the recent longevity transaction between Rolls-Royce and Deutsche Bank. The transaction saw Rolls-Royce offload some £3 billion of its pension liabilities in a longevity swap deal with Deutsche Bank. The longevity risk has in turn been passed on to a group of reinsurers, one of which was identified as SCOR. Now it’s become clear that Prudential have played a big role in the deal.

Prudential’s participation as a reinsurer in this deal saw them reinsure about £500m (or $780m) of the longevity risk from the swap transaction.

“We are pleased to complete our first such transaction with Deutsche Bank, a leading global investment bank, and provide reinsurance for its transaction with the Rolls-Royce Pension Fund,” said Phil Waldeck, senior vice president and head of Prudential’s Pension & Structured Solutions business. “In providing reinsurance for this important transaction, one of the largest longevity risk transfers completed to date, Prudential continues to enhance retirement security through pension de-risking solutions around the world.”

“Falling interest rates, market volatility, increasing life expectancy, and accounting and regulatory changes are prompting plan sponsors, around the world, to explore available options to manage their exposure to risk and protect their balance sheets,” said Amy Kessler, senior vice president and head of Prudential’s Longevity Reinsurance business. “Prudential delivers pension risk transfer solutions that help plan sponsors respond to market turmoil and enhance retirement security for plan participants.”

“Our team from across the Corporate & Investment Bank combined structuring expertise with Deutsche Bank’s balance sheet strength to deliver a cost effective solution for the Rolls-Royce Pension Fund,” said Andrew Reid, Managing Director of European Head of Pensions Origination, Deutsche Bank. “Deutsche Bank is delighted to have worked with Prudential Retirement as a key partner to deliver the solution to the client.”

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