Hymans Robertson LLP, the pensions and financial services consultants, is anticipating more non-traditional risk transfer for pensions, including through the use of capital backed solutions and alternative insurance products.
As a result, the company has promoted Kieran Mistry to the newly created position of Head of Non-Traditional Risk Transfer.
In this role, Mistry will lead Hymans Robertson’s advisory service supporting defined benefit pension scheme trustees and sponsors who are considering new and emerging risk transfer options.
This will include working with the new breed of pension superfunds, delivering capital backed solutions and also other alternative insurance products.
Mistry joined Hymans in 2014 and has since advised numerous pension schemes on their risk transfer and endgame strategies.
More recently, his focus has shifted increasingly towards providing support for pension schemes considering emerging solutions, including the early superfund candidates.
James Mullins, Partner and Head of Risk Transfer at Hymans, commented on Mistry’s appointment, “Non-Traditional Risk Transfer options have an important role to play in helping to reduce risk for pension schemes that cannot afford full buy-out. Kieran brings extensive skills and experience, as well as a lot of enthusiasm, to the leadership of this area. By establishing a specific team to help our clients in the new and emerging risk transfer options we’ll be able to help them fully benefit from the innovation in this part of the market.”
Mistry added, “We’ve seen rapid growth in the number of risk transfer options available over recent years. Capital providers continue to look for new ways to support schemes other than through traditional solutions such as buy-ins, buy-outs and longevity swaps. While superfunds are grabbing much of the headlines, other areas are quietly gaining traction with some getting first transactions over the line in 2020, and many more being developed.
“This innovation is certainly timely, adding valuable tools to help trustees and sponsors looking to manage risk against an historically tough economic backdrop.
“I’m thrilled to take the lead on this advisory service to ensure our clients are able to assess and utilise these new risk transfer tools, incorporating into their endgame strategies, to support better outcomes for their members.”
The search for new pension risk transfer and longevity risk transfer solutions and alternatives suggests a growing need for reinsurance capacity.
It also suggests the potential for more involvement from capital market investors, including insurance-linked securities (ILS) fund managers.
Some ILS fund managers do invest in longevity related reinsurance transactions and for those offering life ILS strategies, longevity risk is a component that is always sought out, in certain forms.
With a consultancy like Hymans suggesting the time is ripe for a growing range of pension and longevity risk transfer alternatives, it suggests a potential future role for the capital markets in some of these deals.
As ever, competition from traditional sources of reinsurance capital will still be high. But as structured capital solutions come to the fore for the pension world, the role of ILS like vehicles in supporting risk transfer for pensions may also become more apparent in the marketplace.
Read about many historical longevity swap and reinsurance transactions in our Longevity Risk Transfer Deal Directory.