Zurich UK and Prudential Financial scoop £1.7bn longevity swap with Nationwide
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Nationwide Pension Fund has completed a £1.7bn UK longevity risk transfer transaction with Zurich UK and US insurer Prudential Financial, covering about 7,000 in-pay members in the UK.
The sponsor is British mutual financial institution Nationwide Building Society.
Catherine Redmond, chair of the fund’s trustee board and trustee executive for trustee firm Bestrustees , said: “This [transaction] is great news for the fund and its members, transferring risk and helping to further protect our members’ pensions.”
Under the transaction, the longevity risk of the pension scheme relating to these members will be passed through Zurich UK to a subsidiary of Prudential, as the reinsurer, with a limited recourse mechanism protecting Zurich UK against exposure under the transaction.
Greg Wenzerul, head of longevity risk transfer for Zurich UK, said: “In a rapidly changing pensions derisking market, with increased pension scheme focus on leverage, longevity swaps continue to represent a sophisticated and valuable derisking approach.”
Rohit Mathur, head of international reinsurance for the retirement strategies business at Prudential, said the recent rise in interest rates have resulted in improvements in pension plan funded status, “accelerating derisking plans for many sponsors”.
Aon was the lead adviser to the Nationwide trustee, with legal counsel provided by Sacker & Partners. Prudential was advised by Willkie Farr & Gallagher, and Zurich UK was advised by Slaughter and May. Insight Investment was appointed to provide ongoing longevity-related services in support of the trustee, including that of collateral manager.
When is a longevity swap more attractive than buyout?
