Aviva PLC, London, agreed to the largest ever longevity swap for its defined benefit Staff Pension Scheme, transferring the risk of 19,000 members to three reinsurers.
Two of the reinsurers are Swiss Re and SCOR, according to news releases from the companies. The name of the third reinsurer could not be learned by press time.
The £5 billion ($8.4 billion) deal removes a third of the pension fund's total longevity risk, according to a news release from law firm Linklaters, which advised the trustee of the fund. Consultant Hymans Robertson also advised the trustee. The size of the pension fund could not be learned by press time.
According to the Linklaters' news release, the custom swap “is the first of its kind that allows an efficient risk transfer to the reinsurance market and opens the door for other schemes to follow suit.”
“The trustee is delighted to have taken another important step in our ongoing process to improve further the level of security of all our members' benefits,” said Sir Ian Prosser, chair of trustees for the Aviva Staff Pension Scheme, in a Hymans Robertson news release. “Hymans Robertson and Linklaters, working with Aviva, have brokered a groundbreaking transaction in order to remove a substantial risk from our scheme.”
Spokesmen for Aviva were not available to comment by press time.