Aon has advised HSBC Bermuda on a £7 billion longevity swap, involving the HSBC Bank (UK) Pension Scheme and the Prudential Insurance Company of America (PICA), the second-largest ever deal of its kind.
The arrangement uses a captive solution with an HSBC-owned insurer in Bermuda and PICA, reinsuring the transaction, which relates to around half the scheme's pension liabilities.
A team from Aon helped with the formation and licensing of the new captive solution, together with advising on the operational infrastructure required to service the deal on an ongoing basis.
The team included members of Aon’s UK-based risk settlement group, led by senior partner Martin Bird, and Aon Insurance Managers (Bermuda), led by managing director Anup Seth.
Martin Bird, senior partner and head, risk settlement at Aon, said: “It is particularly pleasing that Aon was able to bring together all the necessary expertise to support this transaction.”
He continued: “Working in the various offshore locations on this type of longevity deal requires a combination of both jurisdictional expertise and good working relationships - as well as the very longevity-specific expertise related to operational deal structuring.”
He added: “We continue to see very strong demand for pension scheme de-risking solutions, whether in bulk annuity or longevity-only formats—and 2019 remains on course to be another record-breaking year for this market.”
Tom Scott, principal consultant, Aon’s risk settlement said: “This landmark transaction in which we supported HSBC in Bermuda represents another step forward in terms of innovation, with captive structures and other types of insurance structures now enabling even the very largest schemes to access the reinsurance market in an effective manner.”