The pension fund of UK-based insurer Aviva has completed the biggest-ever pension scheme longevity swap on a global basis, transferring liabilities of around £5bn (€6.1bn).
The deal covers the longevity risk for 19,000 members of the Aviva Staff Pension Scheme (ASPS), their widows or widowers and civil partners.
Previously, the largest longevity deal for any UK pension fund had been the £3.2bn deal for BAE Systems-2000 Plan, which was completed in February 2013, according to Aon Hewitt’s register of UK pension fund longevity swap deals.
The next biggest deals were transacted for the UK pension funds of BMW and Rolls-Royce in February 2010 and November 2011, respectively, at £3bn each.
The longevity risk in ASPS has been transferred to three reinsurers: Swiss Re, Munich Re and SCOR Global Life.
The effective date of the transaction is 1 January 2014.
Daniel Harrison, global head of longevity solutions at Swiss Re, said: “There is a compelling rationale for pension plans and insurers to transfer their longevity risk to reinsurers.
“We have a natural offset with our mortality business, the capacity to write the business onto our balance sheet, and the expertise to tailor the transaction to meet our client’s needs.”
Denis Kessler, chairman and chief executive at SCOR, said: “This transaction is notable not only for its size but also as a demonstration of the partnership approach we adopt with our clients.
“With such a complex transaction, it is vital to find a solution that works for the employer, the trustees and the reinsurer.”
SCOR aims to double its longevity business over the course of a three-year business plan.