SCOR secures £1.7bn longevity swap
Pardon the Interruption
This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
French reinsurer SCOR has completed a £1.7bn longevity reinsurance transaction covering the pensions of more than 15,000 members of the defined benefit section of the Balfour Beatty Pension Fund.
The transaction protects the trustee of the scheme by transferring the risk that members live longer than expected.
SCOR will take on 100% of the longevity risk of the pensioners covered. According to the reinsurer, Zurich UK acts as an intermediary insurer, adopting a “pass-through” structure that facilitates the risk transfer to SCOR as the reinsurer.
Frieder Knüpling, chief executive for life and health at SCOR, said the transaction demonstrates the company’s “strong appetite” to deliver longevity solutions to clients.
He said: “Recent world events have brought life and health risks into sharp focus and now, more than ever, we are seeing demand for stability. We are pleased to be supporting the Balfour Beatty pension trustees in bringing additional security to their pension scheme members.”
Greg Wenzerul, head of longevity risk transfer at Zurich, said the ongoing success of the pension longevity swap market “demonstrates the availability and accessibility of such solutions” for pension fund trustees looking to optimise their long-term derisking plans.
Aon and CMS advised the trustee while law firm Eversheds Sutherland advised SCOR.
The DB section of the Balfour Beatty Pension Fund provides pension benefits for around 27,000 people, and the trustee manages assets of around £3bn on behalf of the members of this section. Balfour Beatty finances, develops, and operates infrastructure projects in local communities.
The deal follows SCOR’s £5.5bn longevity swap transaction with Lloyds Bank No. 1 Pension Scheme announced in February. The transaction was structured as an insurance policy where the bank’s insurance subsidiary Scottish Widows acted as an intermediary insurer, while SCOR also reinsured 100% of the risk.
SCOR said: “Together, they demonstrate SCOR’s continued growth in the longevity risk transfer market and contribute to a record-breaking year for longevity volumes written by the group.”
Which pension risk transfer transactions do you prefer, buy-ins, buy-outs or longevity swaps?
