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November 10, 2017updated 13 Nov 2017 10:50am

Prudential Retirement offloads $1.2bn longevity risk to PIC

Prudential Retirement, a unit of Prudential Financial, and Pension Insurance Corporation (PIC) have reached a new $1.2bn longevity reinsurance agreement.

Under the terms of the deal, Prudential Insurance Company of America will assume the longevity risk for $1.2bnin pension liabilities, covering about 4,000 pensioners across four pension schemes.

The latest agreement is the pair’s fifth such transaction since 2015, with now approximately $5bn of longevity risk reinsured between the pair.

Prudential said that the deal underscores the rebounding demand for pension de-risking solutions in the UK, and the desire of many UK pension insurers to manage their risks and capital using longevity reinsurance.

Prudential head of transactions for international longevity reinsurance William McCloskey said: “Prudential is proud to strengthen its growing partnership with Pension Insurance Corporation.

“Our teams have worked closely and collaboratively on five transactions worth nearly $5bn. These agreements help PIC to manage longevity risk and thereby secure the retirement benefits of thousands of UK pensioners.”

Khurram Khan of Pension Insurance Corporation said: “Prudential is now an established longevity reinsurance market participant. This latest agreement covers four sizeable transactions executed by PIC during 2017.

“The collaborative nature of the talks and speed of deal completion highlight the things we value in a partnership. Over 2017 to date, PIC has now reinsured around £3bn of longevity risk in support of an excellent year for new business.”

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