AXA France & RGA in €1.3bn longevity reinsurance swap transaction

by Artemis on November 9, 2016

Reinsurance Group of America (RGA) has entered into a €1.3 billion longevity swap and reinsurance agreement with AXA France, a deal that covers over 15,000 annuitants.

This is the second longevity transaction between RGA and a division of AXA, after the AXA UK pension scheme entered into a £2.8 billion longevity swap transaction with the reinsurance company in 2015, covered at the time by Artemis.

Furthermore, AXA France entered into a reported €750 million longevity swap transaction with reinsurer Hannover Re in 2014, which covered 22,000 insured policyholders for AXA Retirement Savings Company, the French insurers pension insurance arm which has a roughly 20% market share.

The new transaction facilitates the transfer of more than 15,000 annuitants and related commitments of almost €1.3 billion, from AXA France to reinsurer RGA. The deal enables the insurer to manage its longevity exposure and adds to the expanding longevity risk transfer market.

“With this second swap, AXA France continues to secure its obligations associated with longevity, and reinforces its lead as the only insurance player in France to enter into such transactions,” said Jacques de Peretti, Chief Executive Officer (CEO), AXA France.

To date, the majority of the longevity risk transfer market and longevity swap transactions have been most common in the UK, but an ageing population has driven a desire among pension funds to offload rising pension liabilities.

“Through this transaction, RGA again demonstrates its ability to implement effective solutions that mitigate longevity risk under changing regulatory environments,” said John Laughlin, Executive Vice President, Global Financial Solutions, RGA.

RGA has completed a number of longevity swap transactions in the past, and along with others in the longevity risk transfer market has suggested further growth and expansion of the space.

Populations across the globe continue to rise and life expectancies increase, driving a need and desire among pension funds and insurer alike to pass some of the risk off to reinsurance capital, and so far, reinsurers appear more than willing to assume the growing volume of longevity risk that comes their way.

View details of many historical longevity swap and reinsurance transactions in our Longevity Risk Deal Directory.

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