1 week ago
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MetLife has effectively provided reinsurance capacity, while Zurich has acted as intermediary insurer, for a UK £340 million pension longevity swap for the Airways Pension Scheme.
Metropolitan Tower Life Insurance Company is the ultimate provider of risk capital to support the longevity swap and reinsurance arrangement.
The longevity risk was insured with Zurich Assurance Limited, acting as the intermediary insurer, then fully-reinsured through a back-to-back reinsurance arrangement out to the MetLife entity.
The longevity swap arrangement will provide income to the Airways Pension Scheme in the event that members, both active and deferred, live longer than currently expected, enhancing the stability of the Scheme and supporting its ongoing risk management strategy.
As a result, MetLife has assumed 100% of the longevity risk associated with around 1,100 members of the Airways Pension.
Broking and advisory group WTW led the work for the pension trustee on this longevity swap.
Shelly Beard, WTW, explained, “This transaction marks the latest step in the Trustees’ long-term strategy to manage risks in the Scheme and we were delighted to support with this, including working closely with the Trustees to design an innovative method for transferring non-pensioner longevity risk. This is the second longevity swap announced in 2024 covering less than £1bn of liabilities, and the fifth in recent years to include non-pensioners, which goes to show that hedging longevity risk in this way is an option available to schemes of all shapes and sizes.”
Jay Wang, Head of RIS Risk Solutions, MetLife, added, “MetLife’s history and extensive expertise in risk management positions us well to offer Airways Pension Scheme greater certainty in managing its longevity risk. We are pleased to have been selected as the reinsurance partner for this transaction. In line with MetLife’s New Frontier strategy, our financial strength, flexibility and strong track record in risk management underscores our commitment to supporting pension schemes and insurers manage their risk and our dedication to provide innovative and transformative solutions.”
Greg Wenzerul, Head of Longevity Risk Transfer, Zurich UK, also commented, “We are delighted to have played a part in supporting the Trustees deliver this transaction, which provides a cost effective, straightforward and flexible (for the Trustees’ benefit) approach to hedging longevity risk. We believe that the standardisation available through use of the Zurich platform, which has now been used with the vast majority of longevity reinsurers, provides an opportunity for smaller schemes to transact in an efficient and increasingly standardised manner. We will continue to support and encourage the further development of this market, especially with many pension schemes and sponsors increasingly weighing up longer-term risk management pathways.”
This is only the second pure longevity swap transaction we’ve seen so far in 2024, the first also having involved MetLife.
It’s also notable that, as we reported recently, MetLife is set to establish its first life and annuity reinsurance sidecar vehicle, Chariot Re, which in future may take a share of certain pension risk transfer transactions for the company, providing efficient, supportive capacity.
View details of many longevity swaps and longevity reinsurance deals in our longevity risk transfer deal directory.
English (US) ·