Paternoster’s BMW deal first since move to product design

It is also the first concrete move in the derisking market for Abbey Life – which Paternoster is using to write the deal – after the insurer said it was entering the space earlier this year.

Abbey Life’s parent company, Deutsche Bank, is providing capital for the deal, which was constructed and priced by Paternoster’s actuaries.

Former buyout giant Paternoster relinquished its Financial Services Authority licence to write insurance business in April last year. But it has since maintained it would continue “working with third-party capital providers… with a specific focus on the emerging longevity risk transfer market”.

And this deal represents its first foray back into derisking provision since its last completed deal in September 2008, a £250m pensioner buy-in for TI Group.

Paternoster CEO Ed Jervis said: “We are working with Abbey Life on a few longevity swaps. It is a rapidly growing market.

“We have been working on this model for some time and we are going to be seeing the fruits shortly.”

Jervis added that the company anticipates reapplying for a licence to write insurance business in the next financial year.

“We will wait for the upcoming reporting season to go by to get a better view of the lay of the land,” he said.

“But assuming no nasty shocks from the markets or the regulator, we hope to be back in the saddle again before the end of 2010.”