PartnerRe & Zurich in £1bn longevity swap for Fortune 500 pension scheme

Bermuda-based reinsurance firm PartnerRe and Zurich, the global insurance carrier, have backed a £1 billion longevity swap transaction for a UK pension scheme sponsored by a Fortune 500 firm.

Hymans Robertson acted as the lead adviser on the £1 billion swap for the Fortune 500 pension scheme, with PartnerRe acting as the reinsurance carrier and Zurich, as insurer, acting as the intermediary carrier.

The transaction, which covers pensioner and non-pensioner members, insures the majority of the risk that members live longer than expected. It’s seen as a key milestone towards the trustees’ plan to secure all benefits.

Further, it’s among the first in an emerging trend of longevity swaps transactions that has included non-pensioner members as well.

“We are delighted to have guided the Trustee through this latest step in their de-risking journey by addressing a key risk facing the Scheme as it works to secure all benefits as it becomes affordable,” said Iain Pearce, lead advisor at Hymans Robertson.

“As demonstrated by this transaction, trustees are increasingly seeing longevity swaps as a valued and instrumental transaction to support ambitions to buy-out, by accelerating the speed at which this risk can be addressed without restricting investment freedom over their journey plan. The trustee expects to transfer the longevity protection to an insurer as part of a future buy-in when it is affordable to do so.”

While we are unable to confirm it at this stage, it seems as though this longevity swap transaction is the same as the one listed in the Artemis Longevity deal directory as having taken place in the second-quarter of the year.

Steve Southern of 20-20 Trustees, Independent Trustee to the Scheme, said, “The Trustees are delighted to have taken yet another step on the journey to secure benefits for our members without taking avoidable risks. We are delighted with the support received from Hymans Robertson and Gowling for this transaction and for the clarity of strategic advice leading up to this transaction.”

Alongside Hymans Robertson’s role as lead transaction adviser for the scheme and scheme actuary, legal advice was provided by Gowling WLG. Slaughter and May acted as legal advisers for Zurich.

“It was a pleasure to be part of this transaction, which was delivered through a real team effort by all parties and advisers. Longevity swaps are now accessible to a wider range of pension schemes, and they give trustees and employers the chance to offload an unrewarded risk as an interim step on the road towards buying out all liabilities in full,” said Christopher Stiles, partner at Gowling WLG.

Greg Wenzerul, Zurich’s Head of Longevity Risk Transfer, added, “We were delighted that our offering could be effectively tailored to meet the requirements of the pension scheme in question, and to have completed our first transaction involving both Partner Re and also non-pensioner members. We view this process as a step forward in the streamlining of these types of Zurich transactions, which increased efficiencies for all Parties involved.”

Maeve Fleming, Head of Longevity at PartnerRe, commented, “PartnerRe is proud to have supported Zurich UK and the Trustees on this important transaction.

“Including non-pensioners for the first time in a swap with Zurich UK demonstrated how we innovate to meet the needs of our clients as we continue to grow our worldwide longevity reinsurance business. We look forward to continuing to support the development of longevity risk transfer in the UK and globally.”