Lloyds completes longevity swaps covering £5.1bn
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Lloyds Banking Group Pensions Trustees has signed a third and fourth longevity hedge to cover £5.1bn of liabilities against unexpected increases in the life expectancy of its members.
The new insurance and reinsurance arrangements protect £2.1bn and £3bn of pensioner liabilities in the Lloyds Bank Pension Scheme No.2 Scheme and the HBOS Final Salary Pension Scheme respectively. Both transactions are structured as insurance policies with Rothesay Life, while reinsurance us provided by Pacific Life Re International and an insurance subsidiary of Prudential Financial for Lloyds No.2 and HBOS respectively.
The longevity swaps follow two previous deals in 2020 of £10bn with Pacific Life Re and in 2022 of £5.5bn with SCOR.
Trustee director Vicky Paramour, who chairs the investment and funding committee, said: “The selection of Rothesay, Pacific Life Re. and PFI followed a fair, robust and transparent review of the longevity insurance and reinsurance options available across the market.”
Matt Wiberg, senior director at WTW, the lead adviser to the trustee, said: “These transactions were completed with separate reinsurers in a very short space of time and demonstrates continued improvements in the efficiency of contracting in the longevity swap market, particularly for schemes that have previously completed longevity swaps.”
Ben Howe, head of reinsurance at Rothesay, said the transactions demonstrate the continued high demand for longevity protection for UK pension schemes to mitigate potential funding volatility.
Howie Timothy, business Development director at Pacific Life Re, said: “Having worked with the trustee on their first longevity hedge in 2019-20, we were pleased to see how previous hard work can pave the way for a smooth and efficient second execution.”
Rohit Mathur, who heads international reinsurance at US-based PFI, said: “We are pleased to partner with the Lloyds Banking Group Pensions Trustees on a customised longevity transaction that helps to meet their derisking needs.”
The trustees took legal advice from A&O Shearman, led by Philip Jarvis.
The announcement comes only a few days after the BT Pension Scheme revealed a £10bn longevity swap with Swiss Re and Reinsurance Group of America. According to WTW, the two new swaps are in the top 10 largest ever completed, while the BTPS' 2014 transaction remains the largest to date. Other schemes that have large longevity swaps in place include several high street bank and insurer pension schemes.
The new insurance and reinsurance arrangements protect £2.1bn and £3bn of pensioner liabilities in the Lloyds Bank Pension Scheme No.2 Scheme and the HBOS Final Salary Pension Scheme respectively. Both transactions are structured as insurance policies with Rothesay Life, while reinsurance us provided by Pacific Life Re International and an insurance subsidiary of Prudential Financial for Lloyds No.2 and HBOS respectively.
The longevity swaps follow two previous deals in 2020 of £10bn with Pacific Life Re and in 2022 of £5.5bn with SCOR.
Trustee director Vicky Paramour, who chairs the investment and funding committee, said: “The selection of Rothesay, Pacific Life Re. and PFI followed a fair, robust and transparent review of the longevity insurance and reinsurance options available across the market.”
Matt Wiberg, senior director at WTW, the lead adviser to the trustee, said: “These transactions were completed with separate reinsurers in a very short space of time and demonstrates continued improvements in the efficiency of contracting in the longevity swap market, particularly for schemes that have previously completed longevity swaps.”
Ben Howe, head of reinsurance at Rothesay, said the transactions demonstrate the continued high demand for longevity protection for UK pension schemes to mitigate potential funding volatility.
Howie Timothy, business Development director at Pacific Life Re, said: “Having worked with the trustee on their first longevity hedge in 2019-20, we were pleased to see how previous hard work can pave the way for a smooth and efficient second execution.”
Rohit Mathur, who heads international reinsurance at US-based PFI, said: “We are pleased to partner with the Lloyds Banking Group Pensions Trustees on a customised longevity transaction that helps to meet their derisking needs.”
The trustees took legal advice from A&O Shearman, led by Philip Jarvis.
The announcement comes only a few days after the BT Pension Scheme revealed a £10bn longevity swap with Swiss Re and Reinsurance Group of America. According to WTW, the two new swaps are in the top 10 largest ever completed, while the BTPS' 2014 transaction remains the largest to date. Other schemes that have large longevity swaps in place include several high street bank and insurer pension schemes.
