UK bank Nationwideu2019s pension fund has conducted a u00a31.7bn ($2.1bn) longevity swap with Zurich UK and Prudential Financial covering the risk of roughly 7000 members.
nThe transaction transfers the longevity risk of approximately u00a31.7bn of pension scheme liabilities covering approximately 7,000 members.
nThe transaction has been structured so that the longevity risk of the pension scheme relating to these members will be passed through to Zurich UK, to an insurance subsidiary of Prudential Financial as the reinsurer, with a limited recourse mechanism protecting Zurich UK against exposure under the transaction.
nAon was the lead adviser to the Nationwide Pension Fund trustees, with Insight Investment also providing longevity-related services to the trustees. Legal advice was provided by UK law firm Sackers.
nPrudential Financial took counsel from Willkie Farr & Gallagher, while Zurich was advised by Slaughter and May.
nThe deal closed in May a few weeks after the UKu2019s Pension Regulator advised schemes to look at alternatives to full buy-outs given the expected transaction bottleneck after scheme funding levels improve in line with rising interest rates.
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