Investment - Articles - Aon advises NN Life on 13bn euro longevity transaction

Aon has announced that it has assisted NN Life with a €13.5 billion longevity transaction covering a portfolio of annuity policies for over 200,000 pensioners and dependants.

 The transaction will reduce NN Life’s exposure to longevity risk and further strengthen its capital position under Solvency II.
 Aon advised NN Life, the largest insurance company in the Netherlands, in a number of areas. These included:
 • Advice on portfolio-specific best estimate longevity assumptions, combining both Aon’s Demographic Horizons Netherlands postcode mortality model and NN Life’s very large and high-quality mortality experience dataset.
 • Running a broking process, including advising on guide pricing and negotiating longevity assumptions on NN’s behalf with multiple global reinsurers.
 • Providing a high-resolution transaction cashflow model to ensure consistent pricing and for reference by the legal documentation.
 Anatoly Brekhman, deal captain for NN Life, said: “Aon’s support has been very valuable in bringing this longevity block to market. Aon’s Risk Settlement Group and Demographic Horizons team really understand the reinsurance market and provided us with excellent longevity advice. But most importantly, they used this knowledge to run an extremely effective market process for us.”
 Tim Gordon, head of Demographic Horizons at Aon’s Risk Settlement Group, said: “Aon’s Demographics Horizons toolset – and, in particular, our Netherlands postcode mortality model – established a rock solid analytical foundation on which to base our tried and tested pricing process.
 “This was a complex project for NN Life and our aim was to make it as straightforward as possible, so it was a great opportunity for us to work with them.”
 Kishore Ananda, senior longevity consultant at Aon, said: “A well-orchestrated process is essential to obtaining the right pricing – and NN’s process was exemplary in this respect. We were also pleased to provide the transaction models on which the reinsurer contracts were ultimately based.”

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