Longevity risk transfer news

The €6 billion longevity risk transfer hedge completed recently by Dutch headquartered life, pensions and annuities focused insurer Aegon, which Artemis covered here yesterday, was supported by reinsurance capacity from Canada Life Re.

Dutch headquartered life, pensions and annuities focused insurer Aegon has completed its third longevity risk transfer transaction, hedging €6 billion of longevity reserves in the Netherlands to further reduce its exposure to longevity improvements.

As the longevity reinsurance market continues to grow in volume and expand its reach, executives from Reinsurance Group of America (RGA) highlighted a competitive sector during the first-six months of the year.

The AXA UK pension scheme has entered into a £2.8 billion longevity swap transaction, transferring the risk that members live longer than expected to Reinsurance Group of America (RGA Re), and covering around half the closed schemes total liabilities.

Pension Insurance Corporation (PIC) has entered into a £1.6 billion longevity reinsurance transaction with the Prudential Insurance Company of America (PICA), the second transaction between the two in recent months.

Dutch insurance, pensions and investments firm Delta Lloyd and Reinsurance Group of America (RGA) have entered into their second index-based longevity swap transaction, which again covers underlying longevity reserves of around €12 billion.

The mortality expectations of Canadian pension plans are set to be amended after a study by the Office of the Chief Actuary (OCA) showed that mortality rates are on the decline, leading to increases in life expectancy and longevity risk assumptions.

Insurance and reinsurance broker Willis Group has launched a captive type solution to enable pension funds to establish their own insurance intermediary, in order to ease access to global longevity reinsurance capacity.

New longevity assumptions that increase the life expectancies for pension plan cohort members, which ultimately increase pension plan accounting liabilities, will not affect the cost of insurance and reinsurance capacity for longevity risk transfer, according to Prudential.

Pension fund trustees and sponsors are increasingly focused on accessing sources of longevity reinsurance capacity as directly and efficiently as possible, promising to stimulate further growth of the longevity swap market in 2015, according to Aon Hewitt.