longevity risk transfer

The capital markets and its investors can plug any gaps in longevity reinsurance or risk transfer capacity should demand for longevity hedging rise, with index-based longevity hedging likely to become a focus should that need arise, according to Hymans Robertson.

There is no sign of a slowing in demand for longevity risk transfer and reinsurance solutions, as pensions continue to seek out partners to help them transfer their exposures and longevity risk itself looks set to increase again, as health advances could accelerate longevity improvements.

Prudential Retirement, part of Prudential Financial, Inc., says that the UK pension risk transfer market is experiencing healthy growth, as signalled by its closing of a further $3.2 billion of longevity reinsurance deals in recent months.

Legal & General Group Plc has assisted one of the pension schemes of airline British Airways to convert a longevity swap it already had into part of a $4.4 billion pension buy-in, the largest bulk annuity transaction to-date and among the only examples of a longevity swap conversion.

As the market for longevity risk transfer continues to reach new heights, it’s becoming essential for the management of such transactions to remain efficient to support sustainable growth in the sector, according to the Co-founder and Chief Executive Officer (CEO) of Dedomainia, Cedric Fetiveau.

The market for streamlined and smaller longevity swap transactions has a new entrant, as Legal & General Assurance Society Limited (Legal & General) has completed its first such deal, a £300 million longevity insurance deal for a mid-sized UK pension.

The level of activity in pension de-risking as a whole has been high in 2018 so far, with longevity swaps amounting to £2.3 billion transacted, along with £8.1 billion of bulk annuities deals. But Willis Towers Watson questions the availability of capacity for the end of this year.

Prudential Retirement, part of Prudential Financial, Inc. has entered into an agreement to reinsure roughly $1.4 billion (UK £1bn) of pension liability related longevity risk for Aviva Life and Pensions U.K. Ltd., the first such transaction between the two life, pension and annuity giants.

Broker Aon said this morning that the “longevity swap market is back in business” after a hiatus in activity over recent months, with a record year expected as evidenced by the recent completion of a £2 billion longevity swap and reinsurance deal involving insurer Zurich and the UK’s National Grid pension fund.

Insurer Zurich has completed its largest ever longevity swap arrangement, an intermediated arrangement that covers more than £2 billion of pensioner liabilities for the UK’s National Grid Electricity Group of the Electricity Supply Pension Scheme (ESPS).