BBC scheme secures £6bn of liabilities in further longevity swap
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The BBC Pension Scheme has completed a longevity swap with Zurich Assurance and reinsurer MetLife, covering roughly £6bn of pensioner liabilities for around 21,000 members. Aon negotiated the intermediation terms with Zurich and brokered the reinsurance with MetLife.
The scheme previously signed a longevity swap securing £3bn with Zurich in 2020. Taken together, the two longevity transactions protect the scheme against longevity risk relating to nearly all of the scheme’s pensioner and dependant liabilities.
Zurich said as part of the deal, the trustee retains future flexibility, control and security, while minimising cost, governance and operational burden.
Trustee chair Catherine Claydon thanked the advisers and insurers involved and said: “The trustee is pleased to have further mitigated the scheme’s exposure to longevity risk, through a second transaction on highly attractive terms for the scheme."
Greg Wenzerul, Zurich’s head of longevity risk transfer, said: “We’re privileged to have partnered with the scheme trustee and their advisers on this important phase of their derisking strategy.”
Angela Li, MetLife’s head of UK reinsurance, said the deal shows the firm’s dedication to the UK market and its ability to take on large-scale longevity swaps
“MetLife is proud to support the BBC Pension Scheme in this important step of its derisking journey,” she said.
Tom Scott, a risk settlement partner at Aon, said: “This transaction is further evidence of the vibrant longevity insurance and reinsurance markets which continue to offer attractively priced and structured solutions in various forms to UK pension schemes, in this case in the form of a ‘longevity swap’ which means the scheme retains investment control and flexibility.”
The trustees received legal advice from A&O Shearman, while Slaughter and May advised Zurich and Eversheds Sutherland and Debevoise & Plimpton gave advice to MetLife.
UK longevity swaps revealed this year include two £5bn deals by the BT Pension Scheme with Swiss Re and with Reinsurance Group of America, and two transactions covering a combined £5.1bn consisting of a £3bn swap by the HBOS Final Salary Pension Scheme with Prudential Insurance Company of America and a £2.1bn transaction by the Lloyds Bank No.2 Scheme with Pacific Life Re.
WTW’s table of the largest swaps completed to date is led by a £16bn transaction by BTPS with PICA from 2014.
