longevity risk transfer

Recent high levels of activity in the UK pension risk transfer market, featuring longevity swaps and longevity reinsurance transactions, are being driven by insurance companies drive to meet Solvency II requirements.

The Brazilian pension fund market faces growing longevity risk and the regulator is calling for insurers to create products to address this, which will result in new opportunities for the longevity swap and reinsurance providers to tap into a new geographic region.

Longevity is the biggest risk facing corporate pension schemes in the UK and Germany and more likely to cause deficits than low-interest rates, according to Fitch Ratings, which underscores the expected increase in demand for longevity risk transfer and reinsurance.

One of the subsidiaries of Prudential Financial Inc. has entered into a new longevity reinsurance arrangement with UK-based insurer Legal & General Group, covering $2.9 billion of its pension liabilities against the risk of longevity improvements.

The €6 billion longevity risk transfer hedge completed recently by Dutch headquartered life, pensions and annuities focused insurer Aegon, which Artemis covered here yesterday, was supported by reinsurance capacity from Canada Life Re.

Dutch headquartered life, pensions and annuities focused insurer Aegon has completed its third longevity risk transfer transaction, hedging €6 billion of longevity reserves in the Netherlands to further reduce its exposure to longevity improvements.

As the longevity reinsurance market continues to grow in volume and expand its reach, executives from Reinsurance Group of America (RGA) highlighted a competitive sector during the first-six months of the year.

The AXA UK pension scheme has entered into a £2.8 billion longevity swap transaction, transferring the risk that members live longer than expected to Reinsurance Group of America (RGA Re), and covering around half the closed schemes total liabilities.

Pension Insurance Corporation (PIC) has entered into a £1.6 billion longevity reinsurance transaction with the Prudential Insurance Company of America (PICA), the second transaction between the two in recent months.

Dutch insurance, pensions and investments firm Delta Lloyd and Reinsurance Group of America (RGA) have entered into their second index-based longevity swap transaction, which again covers underlying longevity reserves of around €12 billion.