On the go: The £41.2bn Barclays Bank UK Retirement Fund has reinsured £7bn of liability against longevity risk with an insurance subsidiary of Prudential Financial.
In addition to the £5bn the UKRF transacted in 2020 with the Reinsurance Group of America, the deal results in more than three-quarters of current pensioners’ longevity risk now being hedged.
According to a joint statement, the move continues the trustee’s journey to make the scheme more secure for the benefit of all members by reducing risk.
Chair of the scheme’s trustee board Peter Goshawk said: “This second longevity transaction is an important part of our continued derisking of the UKRF and improves benefit security for all members.”
While Aon was the lead adviser to the UKRF on the transaction, Allen & Overy provided legal counsel. Insight Investment was appointed as collateral manager for the transaction.
According to its most recent annual report, the scheme has been on a derisking journey over the past five years.
“The UKRF has significantly derisked the asset portfolio, via a portfolio rotation out of high-return assets into those assets that exhibit lower risk and return with a more stable cash flow-matching profile,” the report read.
As reported in October 2021, it derisked its portfolio by selling return-seeking assets with less predictable cash flows, such as equities, private equities and certain pooled (hedge) funds last year.
“This portfolio rotation is ongoing, albeit at a slower pace over the past 12 months due to the impact of Covid on asset pricing and market supply,” the scheme noted.
This article originally appeared on MandateWire.com
