Life-and-health reinsurer Pacific Life Re has stepped into the U.S. longevity reinsurance arena through a newly signed $3 billion agreement with American National Insurance Company.
The U.S. move follows Pacific Life Re’s recent activity in Europe, where it completed a EUR 1.3 billion longevity swap reinsurance agreement with Aegon Levensverzekering N.V., part of the a.s.r. group, in the Netherlands.
A new transaction is happening as smaller defined-benefit schemes gain access to longevity swap products. WTW recently introduced the Longevity Stream solution. This helps UK pension plans with liabilities between £100 million and £1 billion. It makes longevity hedging easier for them.
Under the arrangement, American National will receive reinsurance capacity that absorbs the financial impact of policyholders outliving actuarial expectations.
Scope of the coverage
The agreement targets liabilities that emerge when retirees live longer than projected, helping to stabilize the insurer’s balance sheet.
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These deals reflect a rising trend in major risk transfers. NN Life & Pensions completed a €4 billion swap with Prudential Financial. The MMC UK Pension Fund also secured a £2 billion swap backed by Munich Re.
WTW & MetLife have provided a longevity swap covering £450 million of liabilities for the Merchant Navy Ratings pension fund, demonstrating how broker-driven solutions are facilitating access to capital-market hedges for UK schemes.
NN Group has announced the successful transfer of €13 billion in longevity risk associated with pension liabilities in the Netherlands to an insurance subsidiary of Prudential Financial, Inc. and global reinsurance specialist Swiss Re, showing the scale at which multinational insurers are now operating.
The BBC Pension Scheme has reduced its longevity risk exposure further. It transferred another £6 billion through a new longevity swap. Zurich provided global insurance support for the arrangement. MetLife contributed reinsurance capacity to the deal.