Longevity risk transfer news

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.

The Prudential Insurance Company of America (PICA), a division of Prudential Financial, Inc. (PFI) company, has entered into a longevity reinsurance transaction with UK-based insurer Pension Insurance Corporation plc (PIC), a provider of specialist insurance for defined benefit pension funds.

The Life & Longevity Markets Association (LLMA), an organisation established to help promote standards and transparency in the longevity risk transfer and hedging market, has added new executives from AXA and Morgan Stanley to its board.

Activity in the pension fund de-risking and longevity hedging market, including use of instruments such as longevity swaps, longevity insurance and reinsurance, is expected to surge, according to Towers Watson.

The global reinsurance market is becoming increasingly attracted to longevity risks, resulting in greater competition for every longevity reinsurance transaction and causing some of the largest reinsurers to adopt a conservative approach to the segment.

Prudential Retirement, possibly the largest global player in pension risk transfer and longevity insurance, reinsurance and swaps, has appointed a new Head of Pension Risk Transfer, to lead the team.

The Bell Canada Pension Plan, operated by BCE Inc., has entered into a groundbreaking $5 billion longevity insurance transaction with Sun Life Financial Inc., who has been supported by reinsurance capacity from SCOR Global Life and RGA Life Reinsurance Company of Canada.

The volume of risk laid off in the pension risk transfer market reached a record level in 2014, according to consultancy Hymans Robertson, with £38 billion of deals completed, including a record £25.4 billion of longevity swaps.

Artex Risk Solutions, the alternative risk and captives arm of brokerage Arthur J Gallagher, has joined forces with PwC to launch Iccaria, a Guernsey domiciled facility which can act as an intermediary insurer for pensions looking to transact longevity swaps.

Aon Hewitt, the retirement, talent and health solutions business of insurance and reinsurance broker Aon plc, noted today that the UK longevity swaps market has reached £50 billion of deals and should hit £70 billion by the end of 2015.