Prudential Retirement has entered into its fifth longevity reinsurance transaction with Pension Insurance Corporation since 2015.
The deal, involving The Prudential Insurance Company of America covers the longevity risk for $1.2bn, around £900m, in pension liabilities and approximately 4,000 pensioners across four pension schemes.
The transaction reflects the returning demand for pension de-risking solutions in the UK and the need many UK pension insurers to manage their risks and capital via longevity reinsurance, Prudential noted.
This agreement with PIC is Prudential Retirement’s fourth major transaction of 2017. The two firms concluded their first reinsurance deal in 2015.
Prudential head of transactions for international longevity reinsurance William McCloskey said: “Prudential is proud to strengthen its growing partnership with Pension Insurance Corporation. Our teams have worked closely and collaboratively on five transactions worth nearly $5bn. These agreements help PIC to manage longevity risk and thereby secure the retirement benefits of thousands of UK pensioners.
“The resurgent market for pension de-risking in 2017—especially in the UK has sparked demand for longevity reinsurance solutions. As part of our partnership, PIC is tapping into Prudential’s capability and capacity to craft solutions that have strengthened Prudential’s position in the UK’s longevity risk transfer market.”
Pension Insurance Corporation head of longevity risk Khurram Khan added: “Prudential is now an established longevity reinsurance market participant. This latest agreement covers four sizeable transactions executed by PIC during 2017. The collaborative nature of the talks and speed of deal completion highlight the things we value in a partnership.”
Over 2017 to date, PIC has reinsured around £3bn of longevity risk.
Prudential Retirement has completed more than $45bn in international reinsurance transactions since 2011, including the largest longevity risk transfer to date, a $27.7bn transaction involving the BT Pension Scheme.