A UK pension scheme sponsored by a Fortune 500 company has completed a £1 billion longevity swap where PartnerRe was the reinsurance carrier and Zurich, as insurer, the intermediary carrier.
The transaction covering pensioner and non-pensioner members insures the majority of the risk that members live longer than expected and is a key milestone towards the trustees' plan to secure all benefits. This is among the first in an emerging trend of longevity swap transactions that has included non-pensioners.
Hymans Robertson was the lead transaction adviser for the Scheme and Scheme Actuary with legal advice provided by Gowling WLG. Slaughter and May acted as legal advisers for Zurich.
Iain Pearce, lead advisor at Hymans Robertson, said: “As demonstrated by this transaction, trustees are increasingly seeing longevity swaps as a valued and instrumental transaction to support ambitions to buy-out, by accelerating the speed at which this risk can be addressed without restricting investment freedom over their journey plan. The trustee expects to transfer the longevity protection to an insurer as part of a future buy-in when it is affordable to do so.”
Greg Wenzerul, Zurich’s head of longevity risk transfer, said: “We were delighted that our offering could be effectively tailored to meet the requirements of the pension scheme in question, and to have completed our first transaction involving both Partner Re and also non-pensioner members. We view this process as a step forward in the streamlining of these types of Zurich transactions, which increased efficiencies for all Parties involved.”
Maeve Fleming, head of longevity at PartnerRe, added: “PartnerRe is proud to have supported Zurich UK and the Trustees on this important transaction. Including non-pensioners for the first time in a swap with Zurich UK demonstrated how we innovate to meet the needs of our clients as we continue to grow our worldwide longevity reinsurance business. We look forward to continuing to support the development of longevity risk transfer in the UK and globally.”
PartnerRe, Zurich, Hymans Robertson