longevity risk transfer

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.

Pension Insurance Corporation plc, a specialist defined benefit pension fund insurer, said it has increased its use of longevity reinsurance and notes that market capacity is on the rise for deferred pension risks, while standardisation of the transactions is increasing.

The largest bulk-annuity deal in the UK has been completed by Legal & General and the transaction saw aerospace and engineering firm Rolls-Royce’s pensioner bespoke longevity swap restructured as part of the arrangement.

London-based Pension Insurance Corp. (PIC) has again increased the volume of longevity reinsurance it is using, as the firm announced participating in another buy-in, this time for the Marks & Spencer pension fund.