Hymans Robertson has advised on a £800m longevity swap for a FTSE100 pension scheme.
Hymans Robertson said that it has negotiated the first “enhanced pass through structure” with Zurich, with the majority of this risk reinsured by Hannover Re. The name of the sponsoring Footsie company has not been released.
A representative of the trustees says this move is a positive step to reduce risk and improve the security of members’ benefits. This longevity swap protects the scheme against the risk of its pensioner and dependant members living longer than expected.
Hymans Robertson risk transfer consultant Baljit Khatra says: “The scheme had already taken significant steps to reduce financial risks, and we identified longevity as being a material outstanding risk for the scheme.
“After a thorough broking process covering reinsurance and all structuring options, we worked closely with the trustee and sponsor to negotiate the first ‘enhanced pass through’ structure in the market.
“This gave the scheme efficient access to longevity protection, whilst retaining flexibility over its future de-risking journey.”
Hymans Robertson says it have advised on over £8bn of risk transfer deals this year, covering all types of insurance risk transfer: this includes buy-ins, buyouts, longevity swap conversions and longevity swaps, such as this transaction.
Zurich’s head of longevity risk transfer, Greg Wenzerul says: “I am delighted our solution fitted the trustee and sponsor’s objectives.
“It is a testament to all involved and the simplicity of our solution that this transaction was quick and simple to execute. This model ensures that Zurich can be competitive in the market for some of the largest transactions, while allowing schemes to benefit from the security, governance and controls associated with UK insurance companies.”