Swiss Re Announces GBP 800 Million Longevity Insurance Cover for LV=’s UK Pension Fund
-GBP 800m (USD 1.3 billion) longevity insurance contract covering over 5,000 members of the pension fund of UK insurer LV=
-The agreement is the first longevity contract with a pension fund that includes insurance for members who have not yet retired
-The contract extends Swiss Re’s longevity reinsurance track record to over USD 12 billion
London, - Swiss Re has completed a GBP 800 million longevity insurance contract with the pension fund of UK insurer LV=. The transaction includes insurance of longevity exposures for 1,000 members who are still to retire.
Swiss Re’s latest longevity insurance agreement covers over 5,000 individuals who were members of the LV= Employee Pension Scheme as of 31 December 2011. The agreement covers a broader population than previous pension market longevity transactions, extending beyond in payment pensioners to also cover members not yet retired down to age 55.
Russell Higginbotham, Swiss Re’s UK Chief Executive Officer, says: “Our clients seek risk transfers solutions with a counterparty who can deliver. We are pleased to have worked closely with LV= and the pension plan trustees to tailor a solution that precisely meets their objectives. A key requirement was to efficiently maximise the extent of the longevity coverage. The result is the first ever pension plan longevity contract that insures the exposure of members yet to retire.”
This agreement confirms reinsurers as a natural home for longevity risk given their financial strength and ability to commit to the long-term cover needed for longevity risk.
Costas Yiasoumi, Swiss Re’s Head of Longevity Solutions says: “Longevity contracts are very long-dated and clients need counterparties that are in this market for the long haul. We offer financial strength, a successful track record and the immediate and long-term benefits of dealing with a longevity end-risk holder. When the client made the strategic decision to implement longevity protection, Swiss Re was a natural counterparty to consider.”
The LV= transaction confirms Swiss Re’s position as the leader in the longevity swap market, having transferred over USD 12 billion in longevity liability to its own books.
The market is becoming more aware of longevity risk. Swiss Re’s ability to execute complex transactions with the balance sheet capacity to support them places the company in a good position for future opportunities.
Alison Martin, Member of Swiss Re’s Group Management Board and Head Life & Health Reinsurance, says: “Swiss Re has led the development of the longevity market and we expect demand for longevity solutions to continue. We will remain selective in how we apply our longevity capacity to deliver customised solutions for our insurance clients.”
Notes to Editors
For more information on this transaction and/or access to experts and managers related to this release please contact Swiss Re media relations: firstname.lastname@example.org or +41(0)43 285 7171.
Swiss Re longevity insurance deals
Date / Cedent / Value
Apr 2007 - Friends Provident - USD 3.4 billion
Jul 2007 - Co-operative Insurance - USD 3.6 billion
Dec 2008 - undisclosed Australian insurer -USD 0.4 billion
Oct 2009 - undisclosed Australian insurer - USD 0.4 billion
Dec 2009 - The Royal County of Berkshire Pension Fund - USD 1.6 billion
May 2012 - Akzo Nobel (CPS) Pension Scheme - USD 2.2 billion
Dec 2012 - LV= Employee Pension Scheme - USD 1.3 billion
In December 2010, Swiss Re transferred USD 50 million of longevity trend risk to the capital markets through its Kortis Capital Ltd. securitisation programme.
The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of over 60 offices globally and is rated “AA-” by Standard & Poor’s, “A1” by Moody’s and “A+” by A.M. Best. Registered shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed on the SIX Swiss Exchange and trade under the symbol SREN. For more information about Swiss Re Group, please visit: www.swissre.com or follow us on Twitter @SwissRe
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