Metlife and Zurich have collaborated with Aon’s Risk Settlement Group to complete a US $3.5 billion transfer of longevity risk for a UK pension scheme, through an intermediated longevity swap and reinsurance arrangement.
Metlife has reinsured the longevity risk, while Zurich stood in the middle of the deal and entered into the longevity swap arrangement with the unnamed UK pension.
Metlife said that its Metropolitan Tower Life Insurance Company subsidiary entered into what is its first UK pension focused longevity reinsurance transaction for this deal.
Zurich Assurance Ltd., a UK based Zurich subsidiary, acted as intermediary, to interface with the pension and facilitate the swap and transfer of risk through reinsurance to Metlife.
This deal was completed in the fourth-quarter of 2021, so adds to the total longevity swap activity in the UK for the last year.
We had reported on and recorded £12.7 billion of UK focused pension scheme longevity swap arrangements in 2021, all of which are listed in our longevity swaps and risk transfer Deal Directory.
This transaction adds around another UK £2.6 billion to that total, taking 2021 longevity swap volumes to approximately £15.3 billion so far.
Under the terms of this transaction, Metropolitan Tower Life Insurance Company has provided reinsurance for the longevity risk associated with the roughly $3.5 billion of pension liabilities.
It’s the first time Metlife has participated in a UK pension longevity swap transaction.
“We are pleased MetLife has been selected to reinsure these obligations. As MetLife’s first pension scheme longevity swap transaction, this marks an important milestone in the evolution of our U.K. longevity reinsurance business and highlights MetLife’s focus on innovation to meet the customers’ needs,” explained Jay Wang, senior vice president and head of Risk Solutions with MetLife’s Retirement & Income Solutions business.
“We are also delighted to have been able to build our relationships with Aon and Zurich in this market and are eager to continue the partnership to support pension scheme de-risking in a time of increased uncertainty,” Wang added.
Tom Scott, Associate Partner in Aon’s Risk Settlement Group, stated, “MetLife’s entry into the reinsurance market supporting U.K. longevity swaps is fantastic news for pension schemes. MetLife adds substantial capacity and appetite to an already very busy sector. With continued high demand from pension schemes for longevity de-risking solutions, this is very welcome and we look forward to another busy year in 2022.”
Greg Wenzerul, Head of Longevity Risk Transfer at Zurich also said, “We are delighted to have worked with MetLife on this latest deal. MetLife’s entry to this market, and the specific features of this transaction, are positive for this market as a whole.”
As we explained yesterday, forecasts for longevity swap activity in the UK for 2022 suggest an even busier marketplace over the coming months. WTW has forecast £25 billion of pension related longevity swaps for 2022.
Read about many historical longevity swap and reinsurance transactions in our Longevity Risk Transfer Deal Directory.