AXA U.K. pension plan secures $4.1 billion longevity swap

AXA U.K. Group Pension Scheme, London, insured £3 billion ($4.1 billion) in liabilities through a longevity swap with Hannover Re, a spokeswoman confirmed.

The longevity swap is the first deal in the U.K. market to include coverage of liabilities for plan participants who have yet to retire, known as deferred participants.

AXA insured liabilities of 16,000 participants, 95% of which are linked to deferred participants.

The £6.1 billion plan has installed the protection to remove the costs associated with retirees living longer than expected, according to a news release Thursday.

"Derisking the scheme will benefit all of our defined benefit scheme members and will not affect any payments to members as they will continue to receive their pension as normal. This is a very positive step in providing additional security of members' pensions," Stephen Yandle, chairman of AXA U.K. Pension Trustees, said in the release.

Trustees and the sponsor were advised by consultant Willis Towers Watson and law firm Linklaters.

Shelly Beard, senior director for transactions at Willis Towers Watson and lead adviser on the deal, said in a separate news release: "As well as removing the majority of the scheme's remaining longevity risk, the inclusion of non-pensioners is very helpful for the scheme's investment strategy as it provides increased cash flow certainty."

AXA previously conducted two longevity swaps for the plan, insuring £2.8 billion with Reinsurance Group of America in 2015 and £550 million in 2019 with Swiss Re. Both deals were linked to retired participants.