On the go: The ICL Group Pension Plan, a Fujitsu pension scheme, has insured longevity risk in respect of £3.7bn of its liabilities, with Swiss Re providing the reinsurance coverage.
The hedge covers pensions in payment for approximately 9,000 members of the scheme and provides long-term protection against additional costs resulting from pensioners or their dependants living longer than expected.
Working with its advisers, the trustee was able to optimise pricing by utilising a new Insight Investment platform to provide access to the reinsurance market via a trustee-owned Guernsey insurance cell.
Insight Investment will act as calculation agent, collateral manager and collateral valuation agent, as well as providing longevity transaction reporting services.
David Sillitoe, trustee chair at ICL Group Pension Plan, said: “By hedging the longevity risk associated with our pensioners, we have significantly reduced the overall risk in the plan and improved security for all our members.
“Attractive reinsurer pricing combined with an efficient approach to access the reinsurance market using a Guernsey-based captive insurance company, has allowed us to remove this risk in a cost-effective manner,” he added.
Willis Towers Watson acted as the actuarial and transaction adviser to the trustee, while Momentum Investment Solutions provided investment advice. Swiss Re received legal advice from Pinsent Masons, while Gowling WLG provided legal advice to the trustee.
This article originally appeared on Mandatewire.com
