Prudential and PIC make sixth longevity reinsurance agreement

In a sign of the demand for defined benefit pension de-risking, Prudential Retirement, part of US insurer Prudential Financial, and the Pension Insurance Corporation have made their sixth longevity reinsurance deal since 2015.

Under the terms of the transaction, the Prudential Insurance Company of America assumes a longevity risk for £900 million in pension liabilities, representing around 7,500 pensioners across two pension schemes. The demand for pension de-risking at pension funds and employers has increased due to improved funding levels as funds have gradually de-risked over a number of years. PIC chief origination officer, Jay Shah, said: “This agreement represents the sixth major reinsurance transaction between the PIC and PICA teams during the past three years. It is testament to the collaborative partnership that has been built. We believe the reinsurance market will continue to be competitive in support of the significant de-risking activity expected over 2018.”

Prudential is the global leader in pension reinsurance and conducted the largest risk transfer deal to date, a $27.7 billion transaction with the BT Pension Scheme.