Lloyds DB schemes secure further longevity reinsurance deals

The announcement follows two such deals that were made public in March, covering liabilities worth £5.1bn.

The most recent three deals are split across the bank’s three main DB pension schemes. A £3.1bn longevity swap, finalised this month, insurers pensioner liabilities in the Lloyds Bank Pension Scheme No.1, while a further deal worth £0.7bn applies to the Lloyds Bank Pension Scheme No.2. This was also finalised this month.

The third deal was completed in September and applies to the HBOS Final Salary Pension Scheme. It is worth £1bn.

Vicky Paramour, trustee director at Law Debenture and chair of the board’s investment and funding committee, said: “We are pleased to have successfully completed these transactions, which further reduce the schemes’ exposure to longevity risk and make the schemes more secure to the benefit of all members.

“The selection of Rothesay and the reinsurers followed a fair, robust and transparent review of the longevity insurance and reinsurance options available across the market.” 

Matt Wiberg of WTW, which was the lead adviser to the Lloyds trustee board, added that collaborative efforts between trustees, the employer, insurers and advisers meant the schemes were able to “capitalise on currently attractive market pricing”.

Ben Howe, head of reinsurance at Rothesay, said the trio of deals “demonstrate the continued high demand for longevity protection for UK pension schemes as part of their wider strategy to mitigate potential funding volatility”.

Rothesay Life was the insurer for all three transactions. The two Lloyds schemes’ longevity swaps were reinsured by an unnamed “major global reinsurer”, according to a press release. The HBOS scheme was reinsured by a subsidiary of US-based Prudential Financial.

Lloyds has been particularly proactive in insuring its pension schemes against the risk of its members living longer than expected.

Previous insurance and reinsurance arrangements were agreed by the trustee board in 2020 and 2022, covering liabilities of £10bn and £5.5bn respectively across the Lloyds Banking Group schemes. In total, the trustees have insured a total of £25bn of their liabilities.