Longevity swap news

Canada Life Reinsurance has entered into a €5.5 billion long-term longevity risk reinsurance arrangement with Dutch firm SRLEV N.V. (VIVAT), covering 70% of €8 billion of in-force liabilities.

Global reinsurance firm Munich Re has entered into a longevity swap with the Lafarge UK Pension Plan, the pension scheme of the global building materials company, protecting it against the risks of its pensioners living longer than forecast.

RGA Life Reinsurance Company of Canada (RGA Canada), part of global life reinsurer Reinsurance Group of America, has completed a transaction to reinsure the longevity risk associated with 45,000 annuitants for Manulife.

The UK Bank of England’s Prudential Regulation Authority (PRA) is proposing changes to the pre-notification requirements for longevity risk transfers and longevity hedging arrangements, which could simplify access to this market for smaller pension schemes.

French reinsurance giant SCOR has completed a £1.2 billion longevity reinsurance deal with specialist defined benefit pension insurer Pension Insurance Corporation plc (PIC), covering the longevity risk for around 8,000 pensioners and spouses.

The longevity swap market has been a little quiet in 2018 for a number of reasons that we’ve documented over the months, but broker Willis Towers Watson (WTW) expects that 2019 will be far more active, with a doubling of longevity swap volumes predicted.

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.