Prudential Financial company, the Prudential Insurance Company of America (PICA), and Scottish Widows, a subsidiary of Lloyd’s Banking Group, have agreed on a longevity reinsurance agreement in which PICA will assume longevity risk for approximately $1.8 billion of Scottish Widows annuity liabilities.
David Lang, Prudential’s lead negotiator for the transaction, said; “Prudential is privileged to be chosen by Scottish Widows as it seeks to efficiently manage its longevity risk over the coming decades.
“With our new partnership, Scottish Widows attains more flexibility for managing longevity risk, trusting that, with PICA, it has chosen a strong counterparty with shared values and a long-term commitment to the longevity risk transfer business.”
Michael Downie, the finance director, Annuities and Investment Strategy at Scottish Widows, added; “I am delighted to have completed our first longevity reinsurance transaction with Prudential Financial. Their financial strength and long-term commitment to the market was a key consideration for Scottish Widows when selecting a counterparty.
“Throughout the negotiations, PICA took the time to understand our needs and actively tailored their offering to meet our requirements.”
The agreement is the first longevity reinsurance agreement between the two entities, and adds to Prudential’s $45 billion in international reinsurance transactions since 2011.