Longevity risk transfer news

Metlife, Inc., one of the largest life and annuities insurance groups in the world, has entered the longevity reinsurance market in the United Kingdom, providing a longevity risk transfer arrangement for regular market participant Pension Insurance Corporation plc (PIC).

Insurance and reinsurance broker and consultancy Aon has warned UK pension schemes not to over-react to the recent short-term spike in mortality rates in the country, as the impact to longevity risk assumptions may not be as significant as it seems.

Canada Life Reinsurance took EUR 5.3 billion of the long-term longevity risk associated with EUR 13.5 billion of in-force liabilities of NN Life’s portfolio, in the recently completed longevity swap and reinsurance arrangement.

NN Life, part of the Nationale-Nederlanden (NN Group), has secured reinsurance and swap arrangements with leading reinsurers Canada Life, Munich Re and Swiss Re to transfer all of the longevity risk associated with some EUR 13.5 billion of pension liabilities from the Netherlands.

The sudden rise in deaths in the United Kingdom due to the Covid-19 coronavirus pandemic could result in some pensions having to post more collateral against their longevity swaps, as report suggest.

Prudential said that it has executed another $6 billion of longevity reinsurance transactions with UK pension risk transfer specialist life insurer Rothesay Life, in two transactions that are the seventh and eighth between the pair.

Global life, longevity and morbidity reinsurance firm Pacific Life Re has completed the second largest UK longevity swap transaction on record, taking on UK £10 billion of longevity risk from Lloyd’s Banking Group pension funds.

The longevity swap market is forecast to experience record levels of activity in 2020, with availability of reinsurance capacity likely to be a key consideration for pensions looking to offload the risk of their members living longer.

The longevity swap market could see a record volume of transactions in 2020 as market conditions look set to make hedging longevity risk particularly conducive, while insurance and reinsurance capital abundant and appetite for large longevity risk transfer deals high.

Insurer Zurich and reinsurance firm Hannover Re have delivered an £800 million longevity swap arrangement for an unnamed UK pension fund belonging to a FTSE 100 firm, protecting it against the risk of pensioners and members living longer than forecast.