Pension Insurance Corporation (PIC) has completed £5.8 billion (USD 7.4 billion) of pension buy-ins and buyouts and has reinsured a record £7 billion (USD 8.9 billion) of longevity risk so far in 2019.
The specialist insurer of defined benefit pension funds has highlighted a very active year for the pension risk transfer market, which has seen PIC conclude a huge £5.8 billion of buyouts and buy-ins with the trustees of these schemes.
During 2019, PIC has also reinsured £7 billion of longevity reinsurance, which it states includes the reinsurance of £1.5 billion (USD 1.9 billion) of deferred (non-pensioner) lives.
The specialist insurer notes that this is the first time such a significant volume of deferred lives have been reinsured in any one period, adding that it signals increased capacity for this type of risk within the reinsurance sector.
Jay Shah, Chief Origination Officer at PIC, commented: “This has been a record-breaking first half for PIC both in terms of the amount of new business transacted and longevity risk re-insured. On the longevity reinsurance we are especially pleased to have insured such a large amount of deferred lives.
“This is a significant development for the reinsurance market, where we are now starting to see the standardisation of these types of deals, which we have had for several years for pensioner deals.”
The £7 billion of longevity reinsurance covers lives associated with pension schemes that PIC has insured in 2019, and also includes longevity exposure it has accumulated from prior years.
In total, PIC has reinsured more than 70% of its total longevity exposure, and has signed treaties with 11 highly-rated reinsurers. The firm states that longevity reinsurance is an intrinsic parts of its business model, having completed £5.6 billion of longevity reinsurance in 2018.
In 2019, PIC has completed transactions with a number of different pensions schemes, including a £1.4 billion deal with Marks & Spencer, a £1.2 billion deal with Dresdner Kleinwort, a £425 million deal with the Co-operative Group, and also £3.3 billion of new business with a series of unnamed pension schemes.
