Dutch insurance firm ASR has completed a €1.3bn longevity swap with Pacific Life Re, insuring parts of a number of pension buy-outs it completed recently.
The transaction, which was announced on Wednesday, is the first deal conducted by Pacific Life Re involving the reinsurance of defined benefit (DB) pension liabilities in the Netherlands.
“Pacific Life Re look forward to continuing to deliver bespoke solutions and supporting our partners in the Dutch market as they navigate the ongoing pension reform through the provision of risk transfer solutions,” commented Vanessa HoVon, managing director, savings and retirement for Europe and the Americas.
The transaction comes less than six months after ASR had announced publicly it was looking at the possibility to reinsure its buyouts of pension funds against longevity risk to reduce the negative impact on its solvency ratio.
Solvency ratio
The four buyouts of pension funds that ASR has concluded so far, with a total value of €2.9bn, had reduced the insurer’s solvency by four percentage points, the firm said at the time.
Commenting on the reinsurance transaction, Jouke Hottinga, managing director, group strategy and balance sheet management at ASR, said it “effectively mitigates our longevity exposure and is fully aligned with our continued objective of optimising the balance sheet”.
According to an ASR spokesperson, the transaction increases the firm’s solvency ratio by 0.5- 1%.
In the past two years, a rash of buyouts has been concluded in the Dutch pension market as smaller pension funds are closing down, triggered by the Dutch pension reform which requires all pension funds to switch from DB to defined contribution plans.
In turn, this has boosted the reinsurance market. Prudential Financial, for example, entered the Dutch reinsurance market for pensions in 2023. It has concluded two multi-billion euro longevity risk transfers with NN Life since. These deals, however, were related to private life insurance policies instead of pension buyouts.
