Prudential in $800mn longevity reinsurance agreement with L&G

by Artemis on December 21, 2017

Prudential Retirement, a division of Prudential Financial, Inc., has entered into its sixth longevity reinsurance agreement since 2014 with Legal & General (L&G), covering $800 million (£600mn) of its pension liabilities against longevity risks.

The latest transaction between the pair covers more than 2,000 pensioners, and signals the “resurgent market” for longevity risk transfer solutions in the UK this year, according to an announcement on the deal.

L&G is a provider of annuity transfers to pension funds, and as a result has been assuming a growing amount of longevity risk. Some of this risk can be retained by the firm, but increasingly it will need to look to solutions to transfer this risk to other parties, using longevity swaps or reinsurance arrangements.

The deal is the sixth longevity reinsurance agreement between the pair since 2014, and they have now partnered on deals that combined reinsure almost $8 billion in longevity risks.

Prudential’s lead negotiator for this transaction, David Lang, said; “Prudential is proud to strengthen its partnership with Legal & General. As a result of these agreements, Legal & General can better manage its longevity risk and secure the retirement benefits of thousands of U.K. pensioners.”

Head of New Business Reinsurance for L&G, Joyeeta Kanungo, added; “This transaction marks a furthering of our partnership with Prudential, whose expertise and strength we value highly. The transaction is also another example of longevity reinsurance having a positive impact in enabling U.K. pension schemes to de-risk efficiently with a strong insurer such as Legal & General.”

Prudential’s Head of Transactions for International Longevity Reinsurance, Bill McCloskey, said; “The longevity reinsurance market is more vibrant than ever, especially in the U.K. With this agreement, Legal & General is tapping into Prudential’s unique ability to keep up with the huge demand in the market today, and benefits from our use of predictive analytics and the strongest transaction team in the industry.

“These investments have enabled Prudential to develop and sustain meaningful relationships with its insurance counterparties.”

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

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