Artex manages British Airways pension longevity risk transfer vehicle

by Artemis on October 4, 2017

Insurance and reinsurance management solutions provider Artex Risk Solutions (Artex) said today that it is administering the Guernsey based insurance vehicle set up by the British Airways Pension Scheme (APS) for its recent longevity swap and reinsurance transaction.

The Airways Pension Scheme (APS) established a cell structure in Guernsey as a way to make its access to the longevity reinsurance market more efficient.

The resulting £1.6 billion transfer of longevity risk utilised the insurance cell in Guernsey to intermediate the transaction and gain more direct access to reinsurance capacity provided by global players Partner Re and Canada Life Re.

By owning its own insurer, the pension scheme can underwrite its own longevity risk and transfer it to the Guernsey insurance vehicle (the swap part of the transaction) and then reinsure it more directly to the global reinsurance market.

Guernsey’s Incorporated Cell Company legislation was used to set up the insurer, which Artex noted offered the pension scheme with “A cost effective platform for the transaction combined with flexibility for the Scheme in relation to any future requirements.”

Paul Eaton, Business Development Director of Artex, commented on the deal “APS had previous experience with longevity swaps, but after careful analysis determined that for future transactions the use of an insurer would offer significant cost and control advantages. A considerable amount of time was spent planning for this transaction, and a key element of the project involved the consideration of where to establish the insurer.

“Guernsey was identified as the ideal jurisdiction having both modern and well-regarded insurance legislation combined with a mature financial services infrastructure and a well-reputed, business-focussed regulatory regime. The selection of the insurance manager was another key decision, and I am delighted that Artex was able to demonstrate to APS our experience, expertise and operational capability to partner on this project.”

Merise Wheatley, Director and project leader at Artex for the set up of the insurance vehicle added; “It has been a great experience to work on this transaction, which makes best use of Guernsey’s strengths as a captive domicile, and I am delighted that Guernsey continues to lead the way in longevity captive transactions. Myself and the rest of the Artex team are delighted that this has been launched successfully to provide APS with long-term longevity risk protection.”

Read about many historical longevity swap and reinsurance transactions in our Longevity Risk Transfer Deal Directory.

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