UK Insurer Secures £2.8B of Longevity Swaps

The second UK provider in three months has turned to the reinsurance sector to protect against longevity risk.

UK insurer Rothesay Life reinsured £2.8 billion ($4.3 billion) of bulk annuity liabilities in 2014 with providers including Prudential Retirement and Pacific Life Re.

Pacific Life insured pension liabilities of more than £1 billion against longevity risk, while Prudential took on more than £1.2 billion.

“A significant proportion of our total longevity risk is hedged and we will continue to be active in the reinsurance market as we take on new pension fund clients,” said Tom Pearce, managing director at Rothesay Life. “We expect another busy year in 2015 for pension buy-outs while conditions remain favourable and corporate appetite for pension de-risking remains strong.”

The arrangement is the second time inside three months that a major UK buy-out provider has reinsured against longevity risk. Legal & General sealed a £1.35 billion longevity swap deal with Prudential in October.

It follows a busy 2014 for Rothesay in which it took on more than £1.7 billion of liabilities from UK pensions, including a £280 million bulk annuity transaction with the Western United Group Pension Scheme.

The group also bought MetLife Assurance in February, bringing in £3 billion in assets.

Related Content: The Day After the Buyout

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