Longevity reinsurance news

The longevity swap market is forecast to experience record levels of activity in 2020, with availability of reinsurance capacity likely to be a key consideration for pensions looking to offload the risk of their members living longer.

The longevity swap market could see a record volume of transactions in 2020 as market conditions look set to make hedging longevity risk particularly conducive, while insurance and reinsurance capital abundant and appetite for large longevity risk transfer deals high.

Dutch headquartered life, pensions and annuities focused insurer Aegon has secured a €12 billion longevity reinsurance transaction with Canada Life Re, helping it to transfer more of its longevity risk to the benefit of its solvency measures.

Insurer Zurich and reinsurance firm Hannover Re have delivered an £800 million longevity swap arrangement for an unnamed UK pension fund belonging to a FTSE 100 firm, protecting it against the risk of pensioners and members living longer than forecast.

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.

Prudential said it has added a new longevity reinsurance arrangement, adding Europe and UK focused pension insurance, buy-in and buy-out specialist The Phoenix Group as a counterparty.