Reinsurance Group of America (RGA) has completed a £5 billion longevity swap transaction with the Trustee of the Barclays Bank UK Retirement Fund (UKRF).
RGA and Barclays expect the deal to help protect the UKRF from the financial risk of an unexpected increase to life expectancy for current pensioners.
“RGA is delighted to partner with the Trustee of the Barclays Bank UK Retirement Fund on a transaction that demonstrates RGA’s dedication to working with clients in the UK, and around the world, to meet their risk management objectives,” said Larry Carson, Executive Vice President, Global Financial Solutions, RGA.
Peter Goshawk, the Chairman of the Trustee, also commented: “In addition to the material reduction of deficit revealed at the 2019 actuarial valuation, the longevity swap is another significant step in our de-risking journey for the UKRF, improving benefit security for all members.”
“I would like to thank Barclays for their support on this project and also to thank the Barclays’ pension team, RGA, and our advisers for helping us to complete a successful transaction,” Goshawk added.
Aon served as the lead advisor to the Barclays UKRF throughout the transaction with RGA.
A team led by senior Aon partner Martin Bird advised on aspects including risk analytics, design and structuring, reinsurance selection and operational establishment.
“It’s great that Aon was able to bring together all the necessary expertise – including our market-leading demographic analytics, our diverse experience of the risk settlement market and insurance capabilities – to support this significant transaction,” said Bird, who is head of Risk Settlement at Aon.
“We worked closely with the Trustee of the UKRF in tailoring an insurance structure solution to hedge the fund’s specific longevity risk profile following a competitive reinsurance selection process.”
Tom Scott, principal consultant in Aon’s Risk Settlement team, further stated: “This transaction, along with others in the pipeline, demonstrates the capacity and appetite of the global reinsurance market to take on pension fund longevity risk, even in these challenging times. Despite the current economic climate, pension schemes can still successfully access the reinsurance market in an effective manner.”
