Pacific Life Re, who manage clients mortality, longevity, and morbidity risk, has completed a longevity swap transaction with the Trustee of the Prudential Staff Pension Scheme.
The longevity swap covers pension liabilities of £3.7 billion relating to over 20,000 pensioners in the scheme and was structured using a Guernsey-based captive insurance company.
The swap aims to protect the scheme from the financial risk of an unexpected increase in life expectancy and to make the scheme more secure to the benefit of all its members.
Elaine Murphy, longevity director at Pacific Life Re, explained the completion and size of the deal as a “huge achievement” despite the challenges of the COVID-19 pandemic.
Murphy said: “We are delighted to have worked with the Trustee of the Prudential Staff Pension Scheme and Willis Towers Watson on this transaction.”
She added: “This transaction demonstrates the continuing strength and capacity of the reinsurance sector to support pension scheme de-risking in a time of increased uncertainty with regards to future life expectancy.”
Willis Towers Watson led the advice for the trustee and CMS provided external legal counsel for Pacific Life Re.
Ian Aley, head of transactions at Willis Towers Watson, noted: “This transaction follows a period of working with the trustee to identify the optimal solution. Within a vibrant market and following a very competitive process including many bidding reinsurers, Pacific Life Re was selected.”
“We were pleased to be able to build on the trustees' in-depth understanding of this type of transaction to help them achieve attractive terms that reduce risk and enhance member security. The transaction demonstrates both the appetite of defined benefit schemes to de-risk their liabilities and how transactions can be successfully structured within the current environment,” he concluded.
In addition, in June, the Willis Pension Scheme entered into a longevity swap transaction with Munich Re to manage longevity risk concerning £1 billion of pensioner liabilities.
