Mercer, Zurich, Pacific Life Re in ???named life??? longevity hedge

Consultancy Mercer, insurance firm Zurich and reinsurance firm Pacific Life Re have assisted an unnamed UK pension plan to offload the longevity exposure associated with a “named life” group of pensioners in a streamlined longevity hedge, according to research by Artemis.


Mercer has acted as lead advisor to the trustees for the transaction which involved GBP90 million of pensioner liabilities for whole-of-life. Zurich Assurance contracted with the trustees to arrange a streamlined hedging arrangement, while Pacific Life Re immediately provided the reinsurance capacity to complete this longevity swap.

The transaction is hailed as the first longevity hedge for “named life” risks for a small pension fund, which could open the doors to longevity swaps and reinsurance capacity for smaller pension plans in the future and expand the longevity risk transfer market as a result.

The hedge was structured as a whole of life insurance policy, transferring the risk of rising costs associated with pensioners living longer than expected. It covers 200 named pensioners and their contingent dependents, hence “named life,” with total liabilities of around GBP90 million.