Longevity risk transfer news

An impressive one-third of the companies in the UK’s FTSE 100 index of leading shares have already transferred longevity risk associated with their pension schemes, according to Aon.

Aon said it is expecting to see a number of large longevity swap transactions completed during the second-half of 2019, as longevity risk transfer and reinsurance pricing remains attractive.

Innovative insurance and reinsurance market regulatory structures help even the largest pension schemes in the world access the reinsurance market more efficiently, broker Aon said.

The £7 billion longevity swap and reinsurance transaction that Prudential Financial, Inc. completed recently for the HSBC Bank UK pension scheme is the second largest such arrangement in longevity risk transfer market history.

The UK pension scheme of HSBC Bank has entered into a longevity swap transaction covering £7 billion of its liabilities with The Prudential Insurance Company of America (PICA), part of Prudential Financial, Inc.

Pension Insurance Corporation plc, a specialist defined benefit pension fund insurer, said it has increased its use of longevity reinsurance and notes that market capacity is on the rise for deferred pension risks, while standardisation of the transactions is increasing.

The largest bulk-annuity deal in the UK has been completed by Legal & General and the transaction saw aerospace and engineering firm Rolls-Royce’s pensioner bespoke longevity swap restructured as part of the arrangement.

London-based Pension Insurance Corp. (PIC) has again increased the volume of longevity reinsurance it is using, as the firm announced participating in another buy-in, this time for the Marks & Spencer pension fund.

PartnerRe has expanded on its recent longevity reinsurance transaction with Canadian insurer Manulife, growing the protection provided to cover around 30,000 annuitants.

As the longevity risk transfer market continues down its impressive growth path, Amy Kessler, Head of the Longevity Risk Transfer at Prudential Financial, Inc. of the U.S., believes there is room for capital markets solutions to play a role.