Metlife has joined forces with Zurich and worked with Aon’s Risk Settlement Group to complete a $3.5bn (€3bn) longevity risk transfer swap for a UK pension scheme through an intermediated longevity swap and reinsurance arrangement.
Metlife has reinsured the longevity risk, while Zurich entered into the longevity swap arrangement with the undisclosed UK pension fund, it was announced.
Metropolitan Tower Life Insurance Company, Metlife’s subsidiary, entered into what is its first UK pension-focused longevity reinsurance transaction for this deal, the firm stated.
Jay Wang, senior vice president and head of risk solutions at MetLife’s Retirement & Income Solutions business, said: “As MetLife’s first pension scheme longevity swap transaction, this marks an important milestone in the evolution of our UK longevity reinsurance business and highlights MetLife’s focus on innovation to meet the customers’ needs.”
Consultancy WTW claimed last week that 2021 was a busy year for bulk annuities and longevity swaps despite significant headwinds.
In its latest report – Pensions risk settlement: a review of 2021 – the firm recorded totals of just under £30bn (€36bn) of bulk annuities and £15bn of longevity swaps, making 2021 the third busiest year ever in this market.
IMI pension fund in buy-in deal with PIC
The IMI plc’s 2014 Deferred Fund has completed a partial buy-in deal with the Pension Insurance Corporation (PIC).
The contract covers £250m (€299m) in liabilities for approximately 1,200 fund members, 95% of which are deferred members, it was announced.
The transaction, which was finalised in December, is the fifth buy-in since 2016 and takes the total liabilities sponsored by IMI which have been insured by PIC to £800m since 2016.
IMI and the pension fund were advised by PwC as lead transaction advisors, while the fund was further advised by WTW as the actuarial advisor, Aon as investment advisor, and SPB as legal advisor.
Duncan Brown, group pensions manager at IMI and secretary to the fund’s trustees, said: “This transaction is [a] huge step in the direction of our long-term de-risking objective of fully insuring our pension obligations.”
He said the fund has now insured close to 80% of its UK defined benefit pension obligations over the last decade “securing the benefits for our members and substantially eliminating uncertainty around costs and cash for IMI plc as corporate sponsor of these obligations”.
Tristan Walker-Buckton, head of pricing at PIC, said that a key aspect of this transaction was the high proportion of deferred members as insuring them required close collaboration with the trustee.
Swapnil Katkar, pension solutions advisor at PwC UK, said “Even though the insured liabilities were almost entirely made up of deferred members which are typically more challenging to insure, and long dated corporate credit spreads in the market were at historically low levels, we were able to work with PIC and other participating bulk insurance providers to ensure competitive pricing and suitable terms could be incorporated in the transaction.”
Just Group completes £345m buy-in transaction
Just Group has completed a full scheme buy-in with the trustees of a UK scheme sponsored by an unnamed global distribution company. This is a significant transaction for both the scheme and Just and was completed at the end of 2021, during a period of intense market activity, Just announced.
This is the largest individual transaction for Just to date and includes the most deferred pensioner liabilities taken on by the group in a single transaction. With just under 1,000 deferred members and nearly 900 pensioner members, it demonstrates Just’s ability to deliver larger full scheme buy-ins, it said.
David Richardson, group chief executive officer at Just, said: “We are very pleased to have provided support to the trustee and secured the member benefits of this scheme. It’s the highest single value transaction our defined benefit business has completed, and has contributed to Just achieving record 2021 defined benefit de-risking sales of £1.9bn, up 28% on 2020.”