Aviva completes £5bn record longevity swap
Three of the world’s biggest reinsurers Munich Re, Swiss Re and SCOR have combined forces to enter into the largest ever longevity transaction with insurer Aviva.
The transaction covers £5 billion of liabilities in the Aviva staff pension scheme making it the largest pension scheme longevity swap completed to date globally.
The transaction covers the pensions of some 19,000 pensioners who are members of the Aviva Staff Pension Scheme. It also covers their widows, widowers, or civil partners.
The risk of these members living longer is transferred from Aviva’s pension scheme to the reinsurance market.
“This significant longevity transaction is fully consistent with SCOR’s risk appetite and longevity strategy and it satisfies our group profitability criteria,” said Paolo De Martin, CEO of SCOR Global Life. “Coming just a few months after closing the transaction with Aegon in the Netherlands, it demonstrates SCOR Global Life’s strong skill set in the global longevity market. SCOR is an important participant in this market and we look forward to partnering with more customers to offer longevity solutions in the months and years to come.”
Denis Kessler, Chairman and CEO of SCOR, added: “This transaction is notable not only for its size but also as a demonstration of the partnership approach we adopt with our clients. With such a complex transaction, it is vital to find a solution that works for the employer, the trustees and the reinsurer.”
Thierry Léger, global head of Life & Health Products at Swiss Re, said: “We are delighted to be supporting Aviva with this transaction. It is a landmark deal for the longevity market because it proves that longevity reinsurance solutions can serve the needs of our largest insurance clients.”
Daniel Harrison, global head of Longevity Solutions at Swiss Re, said: "There is a compelling rationale for pension plans and insurers to transfer their longevity risk to reinsurers. We have a natural offset with our mortality business, the capacity to write the business onto our balance sheet, and the expertise to tailor the transaction to meet our client's needs."
Andrew Rear, chief executive Africa, Asia Pacific, UK and Ireland Life at Munich Re, commented: "We are delighted to see another substantial transaction reach completion. Once again we have demonstrated our longevity expertise and cement ourselves as a major player in the UK longevity market."
Martin Lockwood, head of Longevity at Munich Re UK and Ireland Life, said: "It's always fantastic to close a deal, particularly as longevity transactions remain complex and need real commitment from all parties if they are to execute. We enjoyed working with Aviva to bring this to a successful close."
