The AXA UK Group Pension Scheme has participated in a ₤ 3 billion durability swap with reinsurance firm Hannover Re, in a new first for the durability threat transfer market, a mainly non-pensioner deal.Typically, durability swaps have actually been focused on pensions in payment, so moving the threat of durability from active pensioners or beneficiaries of pensions.
This deal covers the AXA UK Group Pensions Scheme for durability danger connected with pensions that might come into payment after March 31st 2019, so most of the longevity threat transferred is related to non-pensions, those soon to draw their pension advantages.
It indicates that almost 93% (the ₤ 3 billion) of the pension plans liabilities are now protected against the chance of members living longer than expected once they enter into payment, AXA stated today.
Hannover Re provided the reinsurance capability to underpin the durability swap arrangement.
The longevity swap closed on February 27th 2021 and kinds part of the AXA pension plans investment portfolio, structure upon previous longevity threat transfer transactions undertaken to protect pensions that had already entered payment by March 31st 2019.
” I enjoy that the AXA UK Group Pension Scheme has actually taken an even more crucial step to ensure that our plan members benefits are strongly secured versus improvements in life span. De-risking the scheme will benefit all of our DB scheme members and will not impact any payments to members as they will continue to receive their pension as typical. This is a really favorable step in offering extra security of members pensions,” Stephen Yandle, Chair, AXA UK Pension Trustees stated.
” We are happy to continue to support the AXA UK Group Pension Scheme by leveraging our internal technical and operational expertise to secure members benefits. The partnership with Hannover Re in executing a delayed longevity swap, believed to be the first transaction of its type participated in by a pension fund trustee, assists in stabilising the capital position of AXA UK and furthers our dedication to proactively managing our non-core business risks,” Vikram Chatrath, Head of Pension Strategy, AXA UK added.
” We have successfully partnered with the AXA UK Group Pension Scheme and AXA UK to supply security for its scheme members not yet in payment. We are more than pleased to support our clients with risk capability in areas where our customers especially need our security. Our long term expertise in the longevity market allows us to offer solutions for market sectors otherwise difficult to place. This deal shows when again Hannover Res ability and commitment to grow its international durability service,” Claude Chèvre, Executive Board Member at reinsurance company Hannover Re likewise commented.
Willis Towers Watson and Linklaters LLP functioned as lead advisors to the transaction.
Willis Towers Watson called the durability swap “a market first, with over 95% of the 16,000 members covered being non-pensioners.”
Shelly Beard, Senior Director for Transactions at Willis Towers Watson and lead consultant, stated, “Its always a satisfaction to work with a customer that embraces development in the method AXA and the Trustees do. This is the third longevity swap we have actually partnered with the Scheme on over the last 6 years. The speed at which this transaction was finished, even with the extra structuring factors to consider from consisting of non-pensioners, demonstrates that when a preliminary durability swap has been finished, additional transactions can be finished rapidly and effectively. The collective method taken by the AXA UK, Linklaters and Hannover Re groups was also incredibly helpful to the job.
” As well as getting rid of the majority of the Schemes remaining durability threat, the addition of non-pensioners is extremely helpful for the Schemes investment technique as it offers increased cashflow certainty. Whilst pensioner durability swaps have actually ended up being relatively common location in the UK de-risking market considering that we led the first deal in 2009, this is the first whole of life durability swap covering a material volume of non-pensioners and we expect substantial hunger from other pension schemes to replicate the structure.
” More extensively, the longevity swap market remains resilient and represents a chance for pension schemes to handle a product danger whilst retaining the versatility to attain the required investment returns to complete their journey plan.”
Check out lots of historic durability swap and reinsurance transactions in our Longevity Risk Transfer Deal Directory.
Our long term expertise in the longevity market allows us to supply options for market sections otherwise tough to location. This deal shows when again Hannover Res ability and commitment to grow its international durability organization,” Claude Chèvre, Executive Board Member at reinsurance service provider Hannover Re also commented.
This is the third durability swap we have actually partnered with the Scheme on over the last 6 years. The speed at which this transaction was finished, even with the additional structuring factors to consider from including non-pensioners, shows that once an initial durability swap has been completed, additional deals can be finished rapidly and efficiently.