Longevity swap news

Activity in the pension scheme longevity swap and hedging market should increase in 2017 as a number of market forces that slowed activity this year bed in, and pensions become more of a focus for reinsurance capital, according to Shelly Beard of Willis Towers Watson.

The Canada Life Assurance Company has helped the pension plan of the Canadian Bank Note Company, Limited to a streamlined longevity swap, a $35 million transfer of longevity risk associated with its pensioners which is the smallest transaction we’ve seen at Artemis.

Reinsurance Group of America (RGA) has entered into a €1.3 billion longevity swap and reinsurance agreement with AXA France, a deal that covers over 15,000 annuitants.

Due to a dislocation in current pricing for longevity swaps, caused by lower rates of improvement in mortality in the UK, retirement and health advisory Aon Hewitt, a division of the global insurance and reinsurance broker, has warned pension schemes to delay any longevity transactions for the moment.

Insurance group Zurich has completed another longevity swap transaction, helping an unnamed pension fund enter into a risk transfer arrangement covering £50m of pension longevity liabilities and with 75% of the risk transferred to reinsurance firm Pacific Life Re.

Phoenix Life Holdings Limited, a subsidiary of life insurance and reinsurance consolidator Phoenix Group Holdings Limited, has agreed to acquire the Abbey Life business from Deutsche Bank, a deal that will provide the troubled bank with £935m ($1.215 billion) in cash.

Insurance group Zurich has completed two longevity swap transactions with pension funds of the Pirelli group, between them covering £600m of pension longevity liabilities and with 75% of the risk transferred to reinsurance firm Pacific Life Re.

UK life and longevity insurance and reinsurance firm Legal & General says it is actively quoting on more than £16 billion (over US$20.7 billion) of new longevity swaps in the UK alone, and says that it wants to take its pension risk transfer strategy, including longevity risk transfer, to the United States.

Abbey Life Assurance Company Limited (a subsidiary of Deutsche Bank) has completed a £1 billion longevity swap transaction benefiting the Manweb Group of the Electricity Supply Pension Scheme, part of Scottish Power UK PLC’s pension arrangements for subsidiaries.

Prudential has once again increased the longevity reinsurance protection it is providing to UK re/insurer and pension risk transfer specialist Legal & General, with a fourth longevity reinsurance agreement between the pair announced today.