PartnerRe strikes £725m reinsurance deal with PIC

Bermudian PartnerRe has revealed a £725 million longevity reinsurance agreement with UK-based specialist insurer Pension Insurance Corporation (PIC).

The deal covers the longevity risk acquired when PIC insured the Dockworkers Pension Fund in a full buy-in, in November 2017.

Kevin O’Regan, head of longevity and portfolio reinsurance at PartnerRe, said: "PartnerRe is delighted to provide a reinsurance solution that will help PIC to manage their capital more efficiently.

"As their reinsurance partner, we hope that the confidence and reassurance of having well-structured reinsurance in place will enable PIC to continue their vital service to pension scheme members, and we look forward to supporting Khurram and the PIC team on future transactions."

PIC wrote £3.7 billion of new business in 2017 with the trustees of defined benefit pension schemes (2016: £2.6 billion), and reinsured £4 billion of longevity exposure, including some longevity exposure accumulated from prior years, according to the press release.

Khurram Khan, head of longevity risk at PIC, said: “This deal covers a group of lives whose demographic profile made this a challenging portfolio to price. We enjoyed working with PartnerRe. Their focused and nimble approach was central to enabling a rapid completion. We trust that this agreement serves as a useful platform for future business.”

At 31 December 2017, PIC had reinsured 73 percent of its total longevity exposure (2016: 68 percent), it said. PIC’s total number of reinsurance counterparties now stands at ten, with three new relationships developed during 2017.

Longevity reinsurance helps insurers reduce longevity and other demographic related risks, optimises reserving and solvency capital requirements as prescribed under Solvency II, and provides for a more certain and stable liability profile.

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