MMC UK Pension Fund's first longevity swap transaction will cover approximately £2 billion in liabilities for 14,500 pensioners, deferred and active defined benefit members.
The swap will include active members, under Guernsey-based incorporated cell (IC) Fission Gamma.
Fission Gamma was created to insure the longevity risk of the fund and to reinsure this risk with (re)insurer Munich Re.
The fund was advised by Mercer, a wholly-owned subsidiary of Marsh-McLennan. This transaction is the third longevity swap structured through the Mercer-incorporated cell company.
Using special-purpose insurance companies in the form of an IC to transfer longevity risk to the reinsurance market is becoming standard practice in Guernsey, with IC cells used in all longevity transactions structured through Guernsey to date.
