UBS U.K. Pension and Life Assurance Scheme, London, insured £1.4 billion ($1.7 billion) in liabilities through a longevity swap with Zurich Assurance.
The swap — the £3 billion plan's first risk transfer transaction — was subsequently reinsured by Canada Life Assurance Co., a news release said. The swap covers the majority of the liabilities linked to the plan's retirees.
"Until now all the longevity risk in the scheme has been unhedged. We are delighted to have completed this agreement on terms satisfactory to all parties with continuing excellent support from the sponsor, UBS. The trustee is very grateful to its advisers for seeing the market opportunity and for tailoring the complex structure to its needs," Richard Hardie, chairman of the trustee to the plan, said in the release Tuesday.
Caroline Stewart, U.K. chief financial officer at UBS, added in the release: "UBS AG as sponsor to the scheme was consulted throughout the process and is fully supportive of the trustee's strategic risk management objectives and investment decision to materially reduce longevity risk via this type of transaction."
Mercer and law firms Allen and Overy, Gowling WLG, Osler, Hoskin & Harcourt and Chancery Chambers advised the trustee on the transaction.
The insurance firms were advised by Mercer and law firms Herbert Smith Freehills and Pinsent Masons.