Longevity swap news

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).

Prudential Retirement and Pension Insurance Corporation (PIC) have entered into their sixth longevity reinsurance arrangement, a $1.2 billion deal covering around 7,500 pensioners, taking the total longevity risk Prudential Financial has reinsured for PIC to over $6 billion.

Pent-up demand for longevity risk transfer among pension schemes could make 2018 a record year for longevity swaps and reinsurance transactions, now that pricing has caught up with the latest data on mortality trends, according to Aon.

Prudential Financial and Pension Insurance Corporation (PIC) have joined forces to broaden pension de-risking for smaller pension schemes, by expediting the availability of longevity reinsurance through a flow arrangement, that sees Prudential providing guaranteed capacity to back PIC’s pension risk transfer deals.