MMC U.K. Pension Fund, Chichester, England insured £3.4 billion ($4.5 billion) of liabilities, said a spokeswoman for consultant Mercer, which advised on the deal.
The transaction used a captive longevity-hedge strategy to cover the liabilities for 7,500 participants at the £6.5 billion defined benefit pension fund for the U.K. employees of Marsh & McLennan Cos. Mercer is a wholly owned subsidiary of Marsh & McLennan.
The longevity risk was transferred to reinsurers Canada Life Reinsurance and Prudential Financial.
"As part of this transaction, we have advised on and managed a broad and highly competitive process to remove this long-term risk and have been able to facilitate the transfer of risk to the reinsurance market through Mercer's longevity captive solution," Suthan Rajagopalan, lead transaction adviser for the trustee and head of longevity reinsurance at Mercer, said in a news release.
Bruce Rigby, trustee chairman, added in the release: "Rising life expectancy has led to significant increases in U.K. pension scheme liabilities over the past couple of decades. The trustee commissioned a full market review of all longevity risk transfer structuring approaches and corresponding providers. Based on a combination of factors such as cost, efficiency, future flexibility and security, the trustee selected Mercer's longevity captive solution."