SCOR & Zurich in £1.7bn UK pension longevity swap & reinsurance deal

Global reinsurer SCOR and insurer Zurich have both participated in the completion of a £1.7 billion longevity swap and reinsurance arrangement for a UK pension fund.

SCOR is assuming 100% of the longevity risk associated with 15,000 members of the Defined Benefit Section of the Balfour Beatty Pension Fund through a reinsurance agreement.

Zurich UK has acted as the intermediary insurer in the arrangement, acting as counterparty to the pension fund to action a pass-through of the longevity risk to SCOR, effectively the longevity swap.

The arrangement protects the Balfour Beatty Pension Fund and trustee the Balfour Beatty Pension Trust Limited against the risk of members living longer than anticipated and so having to pay their benefits for longer than forecast.

Frieder Knüpling, SCOR, CEO Life & Health, commented on the longevity swap and reinsurance arrangement, “This transaction underlines SCOR’s strong appetite to deliver longevity solutions to our clients. Recent world events have brought life and health risks into sharp focus and now, more than ever, we are seeing demand for stability. We are pleased to be supporting the Balfour Beatty pension trustees in bringing additional security to their pension scheme members.”

Rupen Shah, SCOR, CEO Longevity & Financial Solutions, added, “We are delighted with this record year of longevity volumes. An achievement made possible by a terrific team effort. Huge thanks also to the Balfour Beatty pension trustees, Zurich and all the advisers for the collaborative approach that helped to complete this significant transaction successfully. We remain committed to the pension de-risking market and look forward to supporting many more clients in the future.”

Greg Wenzerul, Zurich, Head of Longevity Risk Transfer, also said, “Congratulations to those involved. We are delighted to add SCOR to the list of reinsurers with whom we have similar arrangements, and for the benefit of the Balfour Beatty pension trustees in this case. The continual success of the pension scheme longevity swap market demonstrates the availability and accessibility of such solutions for pension fund trustees looking to optimise their long-term de-risking plans.”

SCOR was selected as reinsurance provider for this longevity risk transfer after a competitive tender across the longevity market, the company said.

For SCOR, this new longevity swap with the Balfour Beatty Pension Fund follows the £5.5 billion longevity swap transaction with Lloyds Bank No. 1 Pension Scheme announced earlier this year.

The reinsurer said that together these deals “demonstrate SCOR’s continued growth in the longevity risk transfer market and contribute to a record-breaking year for longevity volumes written by the Group.”

Global asset and risk manager Insight Investment has provided collateral management and collateral valuation services to this transaction.

Serkan Bektas, Head of the Client Solutions Group at Insight Investment, explained, “We are pleased to work with Balfour Beatty Pension Fund as it takes the next step on its de-risking journey. Longevity expectations have fluctuated significantly over the past two decades and managing longevity risk is understandably a major consideration for UK pension schemes today. Insight is well positioned to work closely with our clients as we utilise our longevity expertise which has been developed specifically to facilitate the use of longevity swaps by pension schemes. Our aim is to pioneer flexible and efficient approaches to hedging longevity risk for our clients who are seeking to maximise certainty of outcome.”

You can read about numerous longevity risk transfer, longevity swap and reinsurance arrangements in our extensive Longevity Risk Transfer Deal Directory.