The HSBC Bank U.K. Pension Scheme, London, insured £7 billion ($8.5 billion) in liabilities through a longevity swap backed by the Prudential Insurance Co. of America, a spokeswoman said.
The pension plan entered into the swap, its first, with a Bermuda-based HSBC-owned captive insurer to protect the plan against the long-term costs associated with increases in participants' life expectancy, the spokeswoman said. The longevity insurance policy will form part of the plan's investment portfolio. Prudential will reinsure the swap.
"I am delighted that the trustee has taken an important step to ensure that our members' benefits are strongly secured against improvements in life expectancy. This is a continuation of our derisking journey and we are pleased to have completed the deal at attractive pricing and working in partnership with our sponsor," Russell Picot, chairman of the £28.5 billion plan, said in a news release.
The trustee was advised by law firms Kramer Levin Naftalis & Frankel in New York and Appleby Bermuda, Hamilton. HSBC in Bermuda was advised by Allen & Overy, Aon and Appleby Bermuda. Prudential was advised by Willkie Farr & Gallagher and ASW Law.