The largest ever pension scheme insurance deal has been struck by Abbey Life, in association with Paternoster, to provide the BMW (UK) Operations Pension Scheme with a hedge for the life expectancy risks for its almost £3bn of liabilities.

Abbey Life has agreed to insure the longevity risks associated with the 60,000 pensioners in the BMW pension scheme, and will spread a proportion of the risk a group of reinsurers including Hannover Re, Pacific Life Re and Partner Re. The longevity hedge from Abbey Life has been formed to provide flexibility to adjust benefit structures and better match the longevity risk of the scheme.

"In bringing this leading solution to BMW and its UK pension scheme, we have demonstrated our ability to combine our balance sheet strength and internal expertise with the specialist pensions and longevity know-how at Paternoster to bring about a landmark transaction," commented Nardeep Sangha, CEO of Abbey Life. "As this market develops we are committed to providing innovative solutions to UK pension schemes."

Ed Jervis, CEO of Paternoster, added: "UK pension schemes are increasingly looking to reduce risk and increase security for their members through the use of insurance solutions. This transaction represents a ground-breaking precedent in the rapidly growing market for insurance against longevity risks and is a demonstration of the flexibility and innovation which Paternoster continues to bring to this market."

Deutsche Bank's wholly-owned insurance company used Paternoster's longevity modelling techniques and structuring knowledge. Deutsche Bank is the largest shareholder in the specialist pensions insurer.

Meanwhile, Pension Insurance Corporation (PIC) has been named king of the buyout firms, with Aon Consulting's Quarterly Pension Buyout Survey showing that it stole Legal & General's crown with over £1,118 million of business written in 2009. However, this came from just ten cases, compared to L&G's £826 million from 82 cases.

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