Balfour Beatty Pension Fund conducts £1.7 billion longevity swap

Balfour Beatty Pension Fund, London, agreed to a £1.7 billion ($2.1 billion) longevity swap transaction with SCOR and Zurich Assurance, according to news releases Wednesday from several parties involved.

The trustee for the defined benefit fund, Balfour Beatty Pension Trust Ltd., manages £3 billion and 27,000 participants. The longevity swap covers 15,000 participants.

SCOR will take on 100% of the longevity risk, while Zurich U.K. will act as an intermediary insurer through a "pass-through" structure that facilitates the risk transfer to SCOR, according to a statement from SCOR.

Aon was lead adviser on the transaction. Legal advice was provided to the trustee by CMS and to SCOR by Eversheds Sutherland.

Aon partner Tom Scott said in the firm's news release that the transaction marks a further step in the fund's derisking journey and is "further evidence of a vibrant insurance/reinsurance market, which is offering commercially attractive pricing and terms to pension schemes."

Insight Investment was appointed as collateral manager and collateral valuation agent. Serkan Bektas, head of the client solutions group at Insight Investment, said in a separate news release that managing longevity risk "is understandably a major consideration for U.K. pension schemes today," particularly against a backdrop of changing monetary policy and economic conditions.