Legal & General (L&G) has launched into the longevity insurance market from today (17 February 2010), following an investigation into the sector.

The longevity insurance market, which Hymans Robertson today reported took off spectacularly in 2009 with deals covering £4.1bn of pension scheme liabilities, is becoming more relevant to the UK with life expectancy increasing over the last few decades.

Simon Gadd, L&G managing director for annuities, said: "Our entrance to the longevity insurance market builds on our position as a leading provider of de-risking solutions to defined benefit pension schemes. Our strength in this market is built around our leading positions in both the bulk annuity and liability driven investment markets that allows clients to consider a full range of de-risking options.

"Pension schemes have seen increases in future life expectancy continue to increase their liabilities. So, the ability to insure against any further increases is an attractive proposition for scheme trustees and sponsors as they seek to manage this risk within their schemes."

The move, Gadd continued, demonstrates L&G's commitment to develop and grow the pension scheme de-risking market. "Longevity insurance is widely considered as a stepping stone for migration to a fully insured buy-in/buy-out. It can also be used by trustees as part of a 'DIY' de-rising strategy."

Due to time and resources required to set up a longevity insurance contract, Gadd said L&G will typically take part in transactions involving the larger pension schemes. "As a result, we expect volumes of longevity business to vary considerably."

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