Hannover Re has acted as the primary reinsurer for a £800 million longevity swap transaction between Zurich and a FTSE100 pension scheme.
With Hymans Robertson leading the advice on the deal alongside legal transactional counsel CMS, a new and efficient structure was negotiated to meet the requirements of the scheme.
The transaction was unique in its demographics and covers a significant proportion of non-UK overseas lives, providing the Scheme with valuable protection.
“The Trustee is delighted to have taken this positive step in reducing risk and improving the security of members’ benefits,” a representative of the Trustee said.
“This continues the Trustee’s strategy to de-risk the Scheme, with this transaction significantly reducing the key outstanding risk for the Scheme.
“Hymans Robertson’s specialist experience in the longevity insurance market was invaluable. Through their efficiency and tailored broking approach the Scheme was able to save money at each stage of the process”
Baljit Khatra, Risk Transfer Consultant at Hymans Robertson and lead adviser, commented, “The Scheme had already taken significant steps to reduce financial risks, and we identified longevity as being a material outstanding risk for the Scheme.
“After a thorough broking process covering reinsurance and all structuring options, we worked closely with the Trustee and Sponsor to negotiate the first ‘Enhanced Pass Through’ structure in the market.”
Greg Wenzerul, Zurich’s Head of Longevity Risk Transfer, noted, “I am delighted that our solution fitted the Trustee and Sponsor’s objectives. It is a testament to all involved and the simplicity of our solution that this transaction was quick and simple to execute.
“This model ensures that Zurich can be competitive in the market for some of the largest transactions, while allowing schemes to benefit from the security, governance and controls associated with UK insurance companies.”
Claude Chèvre, the responsible member of Hannover Re’s Executive Board, added, “We have successfully joined forces with Hymans Robertson and Zurich in order to provide the required risk protection to this pension scheme.
“As the transaction covers a significant proportion of non-UK overseas scheme members, Hannover Re was able to demonstrate its capability to act as a go-to partner for longevity solutions in an international context.
“The structure developed by Zurich presents an attractive alternative to the existing captive solutions. We are more than happy to support the longevity market not only with risk capacity but also with our expertise.”