Prudential in $1.8 billion longevity reinsurance deal for Scottish Widows

by Artemis on February 5, 2018

Prudential Insurance Company of America (PICA), part of the Prudential Financial, Inc. group, has completed a $1.8 billion longevity reinsurance arrangement for Scottish Widows Limited, a subsidiary of Lloyds Banking Group plc.

The direct longevity risk transfer and reinsurance arrangement saw PICA assume the longevity risk on approximately $1.8 billion (£1.3 billion) of annuity liabilities held by Scottish Widows within its life and annuities book.

“Prudential is privileged to be chosen by Scottish Widows as it seeks to efficiently manage its longevity risk over the coming decades,” commented David Lang, Prudential’s lead negotiator for this transaction. “With our new partnership, Scottish Widows attains more flexibility for managing longevity risk, trusting that, with PICA, it has chosen a strong counterparty with shared values and a long-term commitment to the longevity risk transfer business.”

Michael Downie, finance director, Annuities and Investment Strategy at Scottish Widows, added, “I am delighted to have completed our first longevity reinsurance transaction with Prudential Financial. Their financial strength and long-term commitment to the market was a key consideration for Scottish Widows when selecting a counterparty. Throughout the negotiations, PICA took the time to understand our needs and actively tailored their offering to meet our requirements.”

Amy Kessler, Prudential’s head of longevity reinsurance, stated “The insurer and reinsurer market continues to expand and evolve, and we expect 2018 to continue recent growth trends as managing risk capital becomes increasingly impactful. We are proud that Scottish Widows has chosen to use Prudential’s innovative longevity risk transfer solutions and benefit from our ability to keep up with surging demand from the U.K. and globally. We look forward to building on this important new relationship in the years to come.”

Prudential has now completed over $45 billion in international longevity reinsurance transactions since 2011, including the largest longevity risk transfer transaction on record, a $27.7 billion longevity swap and reinsurance transaction with the BT Pension Scheme.

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

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