longevity risk transfer

A world-first digital marketplace for trading in index-based longevity risk is set to open in Bermuda, insurtech Longitude Exchange announced today.

Reinsurance Group of America (RGA) has completed a longevity reinsurance transaction with NN Life covering €4 billion of underlying reserves for the largest life insurance company in the Netherlands.

France-headquartered global reinsurance company SCOR has provided the capacity to back a UK £5.5 billion longevity swap arrangement for one of Lloyds Banks pension schemes, the reinsurers’ largest longevity reinsurance deal so far.

MetLife, Inc., one of the largest life and annuities insurance groups in the world, has provided reinsurance to cover $2.4 billion of pension fund related longevity risk for European pension and life consolidator Phoenix Group.

Metlife and Zurich have collaborated with Aon’s Risk Settlement Group to complete a US $3.5 billion transfer of longevity risk for a UK pension scheme, through an intermediated longevity swap and reinsurance arrangement.

The market for pension risk transfer, across longevity swaps and bulk annuity arrangements, is forecast to see a bumper UK £65 billion of deals in 2022, with strong growth on the longevity swap side anticipated, according to WTW (Willis Towers Watson), while more third-party capital involvement is also expected.

Dutch headquartered life, pensions and annuities focused insurer Aegon has secured longevity reinsurance to cover a €7 billion of pensions from Reinsurance Group of America (RGA).

Broking group Aon appears to be expecting another large longevity swap deal to complete before the end of the year, forecasting today that 2021 longevity swap volumes will reach £15 billion.

There have been £12 billion worth of longevity swaps in the UK pension risk transfer market in 2021, with total risk transfer including bulk annuity buy-in and out deals expected to reach £40 billion for the year.

The market for longevity swaps has outpaced the use of bulk annuities, when it comes to pension risk transfer deals, through the first-half of 2021 and the second-half could also be busy as there is spare capacity in the market to be used, broker Aon notes.