Prudential Financial strikes $1.2bn longevity reinsurance deal with Rothesay Life

US-based Prudential Retirement, a unit of Prudential Financial, agreed to a $1.2 billion longevity reinsurance deal with UK’s insurance solutions provider Rothesay Life.

In the agreement, Prudential assumes the longevity risk for $1.2 billion (about £960 million) in pension liabilities, covering approximately 22,500 pensioners across eight pension plans.

The transaction underscores the thriving market for U.K. pension de-risking and the continuing focus among UK group annuity writers to optimize capital and manage risk with longevity reinsurance solutions, Prudential said in a statement.

“Prudential is very proud to build upon its growing partnership with Rothesay Life,” said Amy Kessler, head of Prudential Retirement’s longevity risk transfer business.

“Through six years and six transactions, our teams have worked consistently and collaboratively to meet Rothesay’s longevity reinsurance needs and to help secure the retirement benefits for thousands of UK pensioners.”

The two companies struck their five previous longevity reinsurance agreements between 2011 and 2014.

David Lang, vice president of product development, who led the transaction for Prudential Retirement, added: “The growing UK market for pension de-risking has created a significant need for reinsurance solutions. As part of our long-term partnership, Rothesay consistently taps into Prudential’s longevity reinsurance capacity and expertise to support its market-leading pension risk transfer business in the UK”

Rothesay Life was established in 2007, and claims to be the fourth-largest UK annuity provider with more than £20 billion in assets under management.

Prudential Retirement is a global player in the reinsurance market with more than $40 billion in international reinsurance transactions since 2011, including the largest longevity risk transfer transaction on record, a $27.7 billion agreement with the BT Pension Scheme, according to the company.