Bermuda-based reinsurer PartnerRe has underwritten a £725 million longevity reinsurance arrangement for UK specialist defined benefit pension fund insurer Pension Insurance Corporation plc (PIC), the first deal between the two companies.
The longevity reinsurance arrangement sees PartnerRe providing reinsurance capacity to take on the longevity risk assumed when PIC insured the Dockworkers Pension Fund in a full buy-in transaction, in November 2017.
Kevin O’Regan, Head of Longevity and Portfolio Reinsurance at PartnerRe, commented on the deal, “PartnerRe is delighted to provide a reinsurance solution that will help PIC to manage their capital more efficiently. As their reinsurance partner, we hope that the confidence and reassurance of having well-structured reinsurance in place will enable PIC to continue their vital service to pension scheme members, and we look forward to supporting Khurram and the PIC team on future transactions.”
PIC underwrote £3.7 billion of new pension risk transfer business in 2017 and reinsured £4 billion of the longevity exposure it assumed, including some longevity exposure accumulated in prior years. At 31st December 2017, PIC had utilised reinsurance to lay off 73% of its total longevity exposure, up from 68% at the end of 2016.
PartnerRe adds to PIC’s rated reinsurance counterparties, which it now counts at ten with three new relationships developed during 2017.
Khurram Khan, Head of Longevity Risk at PIC, added, “This deal covers a group of lives whose demographic profile made this a challenging portfolio to price. We enjoyed working with PartnerRe. Their focused and nimble approach was central to enabling a rapid completion. We trust that this agreement serves as a useful platform for future business.”
Insurers like PIC benefit from longevity reinsurance as it enables them to reduce longevity and other demographic related exposures in their portfolios, optimises their reserve and solvency capital requirements under Solvency II and offers more stability to their liability profile.
Read about many historical longevity swap and reinsurance transactions, in our Longevity Risk Transfer Deal Directory.