UK roundup: Zurich Assurance, Mercer, FCA, Threadneedle

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Zurich Assurance has agreed a life longevity hedge for an undisclosed UK pension plan.

The hedge, for £90m (€124m) of pension member liabilities, is structured as a “whole of life” insurance policy and covers approximately 200 named pensioners and contingent dependants, hence the “named life” label.

Mercer was the lead advisory to the trustees of the plan.

Zurich UK immediately reinsured the risk with Pacific Life Re.

Suthan Rajagopalan, lead transaction adviser and head of longevity reinsurance at Mercer, said named life longevity hedges had previously only been executed for schemes with more than £400m of liabilities.

He added: “This deal unlocks the door to competitive longevity reinsurance pricing for small and medium-sized schemes, which are more exposed to so-called concentration risk, where there is greater variability in members’ life expectancy due to diverse pension amounts in smaller populations.”

In other news, the Financial Conduct Authority (FCA) has fined Threadneedle Asset Management £6m in relation to incidents in 2011.

The FCA said the fine was for “failing to put in place adequate controls in the fixed income area of its front office, and for providing inaccurate information to the regulator and for failing to correct the inaccurate representation for four months”.

Responding to the FCA’s statement on the fine, Threadneedle said that, in August 2011, it was the intended victim of an attempted fraudulent trade involving collusion between a Threadneedle employee, an external broker and an FSA-regulated entity.

“Threadneedle has cooperated fully with the regulator’s investigation,” it added.

“Today’s fine relates to these historic events. We are confident the issues identified have been fully addressed and are pleased to move forward and continue to focus on delivering for our clients.”

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