SCOR & Pension Insurance Corp. in £1.2bn longevity reinsurance deal

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French reinsurance giant SCOR has completed a £1.2 billion longevity reinsurance deal with specialist defined benefit pension insurer Pension Insurance Corporation plc (PIC), covering the longevity risk for around 8,000 pensioners and spouses.

The transaction is the second between the two companies, after they completed a £1 billion transaction in 2017.

The new transaction provides reinsurance coverage of the longevity risk for around 8,000 in-payment lives and, where applicable, their spouses, across six separate defined benefit pension schemes that PIC had insured. The pair said that the arrangement builds upon the 2017 contract.

PIC continues to utilise major reinsurance firms to offload longevity risk, having reinsured 70% of its exposure and completed over £4 billion of deals this year, with £5 billion possible by year-end, the company said today.

The insurer has now tapped eleven major reinsurance counterparties for coverage of its longevity risk and expects to continue to manage its exposures in this way.

Rupen Shah, Global Head of Longevity at SCOR, commented on the deal, “We are extremely pleased to have supported PIC in their continued efforts to help improve the security of retirees’ pensions. It was a pleasure working with the PIC team and we are particularly happy that the investment put in by both teams during our first transaction last year paid dividends in helping to complete this deal in such an effective and timely manner.”

Khurram Khan, Head of Longevity Risk at PIC, added, “We are delighted to have signed this second agreement with SCOR – characterised by both parties working in a highly efficient and collaborative manner. As UK bulk annuity market volumes continue to increase, reinsurance transactions need to become smoother and offer wider coverage. It is pleasing to see our reinsurance partners responding to these changing demands.”

As we wrote yesterday, longevity swap activity is expected to increase in 2019, requiring more reinsurance capacity to support the activity.

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

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