Pension Insurance Corp’s longevity reinsurance use expands, seals M&S buy-in

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.

Pension Insurance Corp. (PIC) has completed a pension insurance buy-in with the Trustee of the Marks & Spencer Pension Scheme, insuring around £900 million of its pensioner liabilities.

With total liabilities of £10 billion, the Marks & Spencer pension scheme has also entered into another roughly £500 million buy-in with Phoenix Life.

The strategy for UK retailer is seen as focused on longevity de-risking, despite the transactions being full buy-ins, as an expectation of an aging cohort of pensioners is driving the scheme to seek to transfer more of that risk.

Consultant Hymans Robertson has been working with Marks & Spencer on its longevity de-risking strategy.

Joanna Hawkes, Group Treasurer, Marks and Spencer commented, “Hymans Robertson has advised us since 2010 supporting the journey to a very strong position for our pension scheme. Their collaborative and pragmatic approach in advising us on our longevity risk strategy has helped us bring all stakeholders together for the completion of our second set of buy-in transactions.”

Graham Oakley, Chair, Marks and Spencer Pension Trust added, “We’re pleased to announce the purchase of these additional buy-in policies, which provide an important contribution to the Trustee’s ongoing objective of reducing the longevity risk in the scheme to increase the security of all members’ pensions. A collaborative approach with the Company together with efficient and effective advice continues to deliver well-executed and well-priced transactions.”

PIC and Phoenix Life can take the longevity risk alongside the assets to make the transactions work for them, but on the other side use significant longevity reinsurance capacity to help them manage their own growing exposure.

PIC said it has written £2.5 billion of new business with defined benefit pension schemes this year, insuring the benefits of 16,000 pensioners.

It sees a strong pipeline of new business, with over £40 billion of pension scheme liabilities looking to transact, which demonstrates the size of the opportunity and why reinsurance capital is so important.

PIC said it has already completed £3.1 billion of longevity reinsurance this year, bringing the total it has sought reinsurance for since the start of 2018 to almost £9 billion.

Uzma Nazir, Head of Origination Structuring at PIC, said on this deal, “We are proud to have been able to complete this buy-in with the Trustee, despite Brexit-related market volatility. The Trustee is clearly very experienced at working with insurers and we are delighted to partner with it.”

Read about many historical longevity swap and reinsurance transactions in our Longevity Risk Transfer Deal Directory.

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