Swiss Re Makes Inaugural US Retiree Longevity Transaction

Swiss Re Ltd. announced Tuesday a $2 billion longevity risk transfer for an unspecified number of U.S. retirees.

Athene Annuity & Life Co., which insures pension obligations for several defined benefit plans, served as counterparty to the transaction as part of its ordinary course risk management activities, according to a statement from Swiss Re.

The transaction is Swiss Re’s first longevity reinsurance transaction in the U.S. Such deals insure the annuity provider against the risk of plan beneficiaries living longer than expected. Over the past 20 years, Swiss Re has completed more than 30 longevity risk transactions across the U.K., the Netherlands, Singapore and Australia, totaling $50 billion in pension benefits for more than 1 million retirees.

“Swiss Re’s financial strength and structuring experience support Athene’s mission to protect policyholders’ pension income in retirement,” said Michael Bacon, Swiss Re’s head of U.S. globals and transactions, in a statement. “This transaction demonstrates Swiss Re’s continued commitment to delivering tailored longevity risk solutions to leading retirement services providers.”

The transaction comes amidst record pension risk transfer activity in the U.S., totaling near $50 billion over the past two years. Record-high defined benefit funding ratios have led to an increase in plans looking to de-risk.

“With record volumes of defined benefit plan sponsors shifting pension liabilities to insurers, Swiss Re expects significant industry need for longevity risk transfer solutions,” according to a statement from SwissRe.