As demand for pension de-risking continues to surge, Prudential Retirement, a division of Prudential Financial, Inc., has entered into its sixth longevity reinsurance agreement with Pension Insurance Corporation plc (PIC).
The latest deal between the pair sees the Prudential Insurance Company of America (PICA) assume the longevity risk for £900 million (roughly $1.2 billion) in pension liabilities, representing roughly 7,500 pensioners across two pension schemes.
This is the sixth longevity reinsurance agreement between the two companies since 2015, and signals strong demand for longevity reinsurance in the UK.
Tom Cahill, a Director on Prudential’s reinsurance team, said: “We at Prudential are proud to strengthen our growing partnership with Pension Insurance Corporation. Our two teams have not only worked closely on several transactions, but we have also collaborated on innovative new processes that have helped smaller schemes access the pension de-risking marketplace.”
Overall, the pair have come to agreements collectively worth over $6 billion (roughly £4.4 billion).
Chief Origination Officer at PIC, Jay Shah, said: “This agreement represents the sixth major reinsurance transaction between the PIC and PICA teams during the past three years. It is testament to the collaborative partnership that has been built. We believe the reinsurance market will continue to be competitive in support of the significant de-risking activity expected over 2018.”
This is Prudential’s first longevity reinsurance transaction of the year, and since 2011, the firm has completed pension market reinsurance transactions amounting to over $50 billion.
Head of longevity risk transfer at Prudential, Amy Kessler, commented: “Over the last several years, Prudential’s longevity reinsurance innovations have proven time and again to help companies achieve certainty in their liabilities. Insurers like PIC come to us for our reinsurance expertise, our deep capabilities, and our capacity to innovate in ways that meet the changing needs of institutions. Most importantly, we have worked closely with PIC to help them secure the pension benefits for thousands of people.”
