Willis Pension Scheme, Ipswich, England, insured £1 billion ($1.2 billion) in liabilities through a longevity swap with Munich Re, a spokeswoman confirmed.
In its first longevity swap, the plan covered the liabilities of 3,500 plan participants. The longevity swap transfers the longevity risk in relation to all of the plan's retirees, the spokeswoman said.
The plan's assets could not be learned.
The longevity risk has been reinsured by a Willis Towers Watson's Guernsey-based captive insurance company fully owned by the trustee of the plan, according to a news release Tuesday.
"I am delighted that the trustee has taken a first and significant step to ensure that our members' benefits are secured against future improvements in life expectancy, supplementing the trustee's wider risk management program to protect the scheme against investment and demographic volatility. The transaction was concluded effectively, enabling us to access the longevity swap markets whilst pricing was attractive relative to scheme funding," Peter Routledge, chairman of the Willis Pension Scheme, said in the release.
Consultant Willis Towers Watson and law firms Travers Smith LLP, Carey Olson LLP and Hengeler Mueller advised the trustees. Consultant Lincoln Pensions advised on the reinsurer's ability to cover downside risk, known as the covenant.
Sidley Austin LLP provided legal advice to Munich Re.