Global reinsurer Swiss Re has helped transfer risks associated with 9,000 members of Fujitsu’s ICL Group Pension Plan, after backing a new £3.7 billion longevity swap deal.
By leveraging a Guernsey captive insurance cell, not only was the risk transfer’s pricing optimised, its access to reinsurance capital became more efficient.
After the Guernsey cell and pension plan had entered their arrangement, Swiss Re stepped in to provide reinsurance backing and streamline access to the global reinsurance market, ensuring a smooth transfer.
Specialist asset manager Insight Investment provided the captive insurance cell deployed as an intermediary insurer in the deal.
The firm also acted as calculation agent, collateral manager and collateral valuation agent for the swap, while also taking on reporting responsibilities.
“By hedging the longevity risk associated with our pensioners, we have significantly reduced the overall risk in the Plan and improved security for all our members,” said David Sillitoe, Chair of the Trustees for the ICL Group Pension Plan, commented on the arrangement.
“Furthermore, attractive reinsurer pricing combined with an efficient approach to access the reinsurance market using a Guernsey based captive insurance company, has allowed us to remove this risk in a cost-effective manner.”
Serkan Bektas, Head of the Client Solutions Group at Insight Investment, added, “We are pleased to partner with the ICL Group Pension Plan as it takes the next step on its de-risking journey.
“This transaction has made broad use of Insight’s longevity platform, which we built specifically to facilitate the use of longevity swaps by pension schemes. Our aim is to pioneer flexible and efficient approaches to hedging longevity risk.”
Lead actuarial and transaction advisory services were provided to the Trustee by Willis Towers Watson, while Gowling WLG LLP, Momentum Investment Solutions and Consulting provided additional legal and investment advice.
“This transaction represents another exciting development in the longevity market, with the structuring of the swap through Insight Investment’s new intermediary platform,” noted Matt Wiberg, Senior Consultant and longevity hedging specialist at Willis Towers Watson.
“On behalf of the Trustee, Willis Towers Watson is delighted to have successfully implemented the swap using this structure and to have led the price and commercial negotiations, resulting in the removal of a substantial element of risk at an attractive price.”
Paul Feathers, Partner at Gowling WLG LLP, added, “It was a pleasure to be a part of this significant de-risking milestone, which has been delivered by a huge team effort from all the parties and their advisory teams. The Gowling team is delighted for the Trustee, our long-standing client.”
This latest deal takes 2021’s UK longevity swap activity to around £12.7 billion, with three transactions completed in total.
Read about many historical longevity swap and reinsurance transactions in our Sister site Artemis’ Longevity Risk Transfer Deal Directory.
