Bermuda-based reinsurance firm PartnerRe and Zurich, the global insurance company, have backed a £1bn longevity swap deal for a Fortune 500-sponsored UK pension scheme.
Hymans Robertson acted as lead adviser on the £1 billion swap for the Fortune 500 pension scheme, with PartnerRe acting as reinsurer and Zurich, as insurer, acting as intermediary carrier.
The transaction, which covers retired and non-retired members, insures the majority of the risk that members live longer than expected. It is seen as a key step towards the administrators plan to secure full benefits.
Additionally, this is one of the first trades in a new trend of longevity exchanges that also includes non-retired members.
“We are delighted to have guided the trustee through this final step in their risk reduction journey by addressing a key risk the plan faces as it strives to secure all benefits as it becomes affordable,” said Iain Pearce, Senior Advisor at Hymans Robertson.
“As this transaction demonstrates, trustees increasingly view longevity swaps as a valued transaction and instrumental in supporting buyout ambitions, accelerating the speed at which this risk can be addressed without restricting investment freedom on their travel plan.The trustee expects to transfer the longevity protection to an insurer as part of a future buyout when it is affordable to do so.
Although we are unable to confirm at this stage, it appears that this longevity swap transaction is the same one listed in the Artemis Longevity Transaction Directory as having taken place in the second quarter of the year.
Steve Southern of 20-20 Trustees, Independent Scheme Trustee, said: “The Trustees are delighted to have taken another step in the journey to secure benefits for our members without taking avoidable risks. We are delighted with the support received from Hymans Robertson and Gowling for this transaction and the clarity of the strategic advice leading to this transaction.
Alongside Hymans Robertson’s role as senior transaction advisor to the scheme and actuary to the scheme, legal advice was provided by Gowling WLG. Slaughter and May acted as legal advisors to Zurich.
“It was a pleasure to be part of this transaction, which was achieved through true teamwork from all parties and advisors. Longevity swaps are now available to a wider range of pension plans, and they give trustees and employers the ability to offload unrewarded risk as an interim step on the road to full redemption of all liabilities.” , said Christopher Stiles, partner at Gowling WLG. .
Greg Wenzerul, Zurich’s Head of Longevity Risk Transfer, added: “We are delighted that our offering can be effectively tailored to the requirements of the pension scheme in question, and to have completed our first transaction involving both Partner Re and non-retirees. members. We view this process as a step forward in streamlining these types of transactions at Zurich, which has increased efficiency for all parties involved. »
Maeve Fleming, Head of Longevity at PartnerRe, said: “PartnerRe is proud to have supported Zurich UK and the trustees in this important transaction.
“Including non-retirees in an exchange with Zurich UK for the first time demonstrated how we are innovating to meet the needs of our clients as we continue to grow our global longevity reinsurance business. We look forward to continuing to support the development of longevity risk transfer in the UK and globally. »
You can learn more about many longevity risk transfer, longevity exchange and reinsurance agreements in our extensive Directory of Longevity Risk Transfer Transactions.