longevity risk transfer

ITV plc, a British television broadcaster, has announced that it has entered into a £1.7 billion longevity swap with Credit Suisse to remove the risks associated with increases in pension liabilities due to longer than expected life spans of members of their defined benefit pension scheme. Towers Watson advised the ITV Pension Scheme on the […]

To date there has only been a single insurance-linked security transaction which transferred the risk of policyholders living longer, or longevity risk, to the capital markets. That transaction, Kortis Capital Ltd. which was sponsored by Swiss Re, successfully came to market in December 2010 but so far no-one else has tried to emulate the deal.

The market for transferring the risks associated with pension schemes, including transferring longevity risk, has continued to grow during the last quarter in the UK. Q2 became one of the busiest quarters for the pension risk transfer market since the credit crisis of 2008, resulting in £1.4 billion of risk transfer deals completed, comprising buy-ins, […]

KPMG reports today in a press release that the volume of pension buy-in deals in the UK has reached over £3 billion in the past year. Buy-ins see pension funds transfer some of their liabilities to the insurance market often with the sole purpose of offloading the longevity risk which is inherent in many large […]

An Aon Hewitt executive told Professional Pensions that even small pension schemes should consider hedging their longevity risks or entering into longevity risk transfer transactions. To date, longevity risk transfer transactions have been large affairs with schemes worth billions involved, but the Aon Hewitt representative suggests that could change.

Pension Corporation have entered into another deal which see’s them take on the assets and liabilities of a UK pension scheme. The latest transaction see’s Pension Corporation take on over £60m of pension liabilities from manufacturer Toray Textiles.

Prudential Retirement has announced the completion of its first longevity reinsurance transaction. The transaction sees Prudential provide reinsurance to UK based Rothesay Life, a subsidiary of Goldman Sachs, covering pension account longevity risks to a value of UK£100m (approx $160m).

For pension scheme sponsors and trustees longevity risk, the risk associated with pensioners living longer resulting in pension schemes paying them for longer than expected, remains a major concern and one that has increased in importance to them in the past year, according to a study by MetLife Assurance.

Pension Corporation, a UK insurer of pension plans and one of the largest players in the longevity risk transfer and pension de-risking markets, is seeking additional funding totalling UK£400m from an investment of fresh capital from Luxembourg based specialist investment fund Reinet.

The market for pension scheme hedging, de-risking and pension risk transfer has taken another step forward as Prudential announced the completion of the first pension buy-in transaction in the United States. To date the pension risk transfer market has been more prevalent in Europe.