15/12/2009
By Sophie Baker
Swiss Re is to provide the UK's Royal County of Berkshire Pension Fund (RBPF) with protection against longevity risk in its first longevity transaction with a pension fund.
The deal, to protect against the uncertainty associated with longevity risk on CHF 1.7bn of pensioner liabilities, covers 11,000 pensions of the fund that were in payment on 31 July 2009. In return, the RBPF pays regular premiums to Swiss Re according to a fixed schedule.
"We are very proud to announce this innovative transaction, because it is not only Swiss Re's first longevity protection written for a pension fund, but the first pure longevity risk transfer written for any governmental body worldwide," commented Christian Mumenthaler, head of life and health at Swiss Re.
The longevity swap means that any future positive or negative deviation in pension payments due to uncertain longevity is absorbed by Swiss Re, and the RBPF retains legal ownership of its assets and complete control over its investment strategy.
Costas Yiasoumi, who led the transaction for Swiss Re, added: "We are pleased to have completed our first pension plan transaction so soon after expanding our activities to offer pension plans direct access to Swiss Re's longevity capacity. This demonstrates our ability to take tried and tested solutions created for insurance clients and apply them to occupational pension plans.
