The £1 billion UK Service provider Navy Rankings Pension Fund has secured a long life swap association to cowl liabilities amounting to £450 million, with the help of dealer WTW and reinsurance capability from MetLife.
That is the primary pure longevity swap transaction we’ve seen to date in 2024.
There have been loads of pension buy-out and buy-in transactions, in addition to some that convert from longevity swap to a complete pension threat switch, however longevity swaps have been absent from the market, at the least from our vantage level this 12 months.
This longevity swap has been transacted by way of a Guernsey captive insurer owned by the pension fund’s trustee, that has fronted the pension for the longevity swap switch, whereas then coming into into a long life reinsurance settlement with MetLife, which absorbs the total threat from the deal.
As with all longevity swap and threat switch offers, the purpose is to switch the legal responsibility related to sure pensioners and dependents dwelling longer than anticipated, with solely the longevity threat transacted and no pension belongings altering fingers.
Melanie Cusack, Trustee on the Service provider Navy Rankings Pension Fund (MNRPF), commented, “I’m delighted that the Trustee has taken an essential step to make sure that our members’ advantages are strongly secured towards will increase in life expectancy. This can be a continuation of our de-risking journey, and we’re happy to have accomplished the cope with engaging economics. This can be a optimistic step in offering each extra safety for members’ pensions and certainty for employers.”
Jay Wang, Head of Danger Options at MetLife, the reinsurance capability supplier, added, “MetLife’s lengthy historical past and experience in threat administration positions us properly to supply better certainty for MNRPF in relation to its longevity threat. We’re happy to have been chosen for the reinsurance of this transaction, This transaction demonstrates MetLife’s dedication to supporting options which assist pension schemes and insurers handle longevity threat.”
Shelly Beard, Managing Director at WTW, the lead adviser to the Trustee for this deal, additionally stated, “This transaction demonstrates that longevity swaps are an possibility for smaller tranches of liabilities. We labored with the Trustee to attain a aggressive reinsurer choice course of and engaging economics relative to the Fund’s reserves. It was a pleasure to work with MetLife to agree a transaction that met their, and the Trustee’s, targets, and to make sure that the Trustee’s future flexibility is maximised.”
View particulars of many longevity swaps and longevity reinsurance deals in our longevity risk transfer deal directory.
