While it’s impossible to predict the long-term impacts of the COVID-19 pandemic on the pension risk transfer (PRT) space, for expanding life re/insurer L&G, there’s an opportunity to offer necessary life-time protection during these unprecedented times.
This is according to the Chief Executive Officer (CEO) of the firm’s reinsurance hub L&G Re, Thomas Olunloyo, who in a recent interview with Reinsurance News discussed the potential impacts of the COVID-19 pandemic on the growing PRT sector.
“It’s hard to say what the long-term impacts could be,” he began, “but, what I can tell you, is that in the short-term, we’ve seen continued PRT activity in the UK and in the U.S.”
In March, and in spite of growing COVID-19-induced economic challenges, L&G revealed that its PRT unit successfully completed eight transactions, securing a combined £261 million of pensioners’ benefits.
Like many businesses, L&G is working remotely but the company’s ability to transact as usual during these uncertain times shows that its practices to enable remote pricing, negotiations, and signing of deals is working.
“So, we certainly have not seen a material slowdown in activity in the UK. But, it’s impossible to say how that is going to play out long-term, of course.
“I think what’s important to note is that the opportunity right now is to make sure that we’re able to provide the capacity and the products to the customers looking to secure those benefits.
“At a time like this, providing protection for seniors becomes even more important, and that’s what we do, we guarantee their life-time income, which is a really powerful thing,” said Olunloyo.
He continued to explain that although the coronavirus pandemic isn’t necessarily going to create more or less opportunities, it does bring into focus financial security, most notably for seniors.
“When you think about the ageing population globally, we have increasing numbers of people over the age of 65 receiving a pension. And, at a time like this of tremendous economic uncertainty, being able to guarantee that lifetime income is such an important thing.
“If anything, it puts emphasis on that and an emphasis on companies like ourselves, that guarantee incomes in retirement as our primary source of business,” he said.
Exactly what impact the pandemic has on demand for pension risk transfer solutions remains to be seen and like so much of the fallout, impossible to predict.
Of course, whether those pension schemes that are in a financial position to proceed with transactions still do, is up to them during these uncertain times. However, for those that do choose to secure the benefits of their members, it’s clear that L&G remains willing and able to transact deals to meet the critical demand.
