Home ListingOctober 28, 2014

L&G Seals Longevity Swap for Buy-Out Assets

The UK insurer has moved to protect £1.35 billion of pension assets against pensioners living longer than expected.

Reported by Featured Author

Legal & General (L&G) has struck a deal with Prudential Retirement Insurance and Annuity Company (PRIAC) to reinsure £1.35 billion of its bulk annuity business against longevity improvements.

The transaction transfers the longevity risk of roughly 5.5% of the assets L&G has taken on through buy-in and buy-out deals with pension funds. In total L&G has £24.6 billion ($39 billion) in insured pension assets, covering more than a million pensioners and deferred members.

PRIAC, part of US insurance giant Prudential Financial, participated in the UK’s biggest longevity risk transfer transaction earlier this year, which involved insuring £16 billion of assets in the BT Pension Scheme against improvements in longevity.

The group has backed buy-outs with pharmaceutical firm Bristol-Myers and mobile phone provider Motorola this year. It stood the other side of the record General Motors and Verizon de-risking deals.

L&G has also been active in the buy-out market this year, taking on £3.1 billion of pension liabilities including AkzoNobel’s ICI Pension Fund and an international pension run by Unilever.

CIO’s de-risking special issue is published next month. Subscribe to the print or digital edition of the magazine.