Articles - Hannover Re assumes portfolio of longevity risks in the UK

 Hannover Re has successfully concluded a block transaction for longevity risks in the United Kingdom. The reinsured portfolio consists of pension obligations assumed by the insurer Legal & General for some 11,500 employees of the UK industrial enterprise Pilkington with a volume of around GBP 1 billion. The portfolio encompasses exclusively persons who are drawing a pension.

 The swap transaction hedges the risk that the life expectancy of the pensioners may prove to be higher than anticipated, hence requiring pension payments to be made for a longer period.

 "With this transaction we are cementing our leading position in the attractive longevity risks market", Chief Executive Officer Ulrich Wallin explained. "Going forward, too, we anticipate good business opportunities since it is likely that companies will increasingly seek to limit their direct pension obligations."

 Hannover Re is to take over the bulk of the business, while the rest will remain with Legal & General. Only the biometric risk is assumed, not the investment and inflation risks.

 Hannover Re anticipates premium income of roughly GBP 800 million over the entire term of the transaction, with some GBP 60 million attributable to the 2012 financial year.

 For Hannover Re the assumption of longevity risks also forms an attractive part of its risk management since longevity risks are negatively correlated with mortality risks and hence promote better diversification of the portfolio.

 Through its involvement in enhanced annuities the company's activities in the area of longevity risks go back as far as the mid-1990s. Since concluding its first longevity block transaction in 1998 Hannover Re has assumed pension obligations totalling altogether around EUR 5 billion, concentrating primarily on the blue-collar workers' segment. Hannover Re accepted its hitherto largest volume of longevity risks in 2010 in connection with a portfolio of pension obligations for employees of the carmaker BMW in the UK.

Back to Index

Similar News to this Story

How to identify the key issues early in reserving
This article looks at how an analytical approach to reserving can help actuaries focus on what really matters, right at the start of the process. We
Closing the net on ghost brokers with email intelligence
As households face the biggest economic squeeze in generations , finding ways to cut the cost of everyday but essential living expenses such as motor
10 Plus C level Claims Executives share their insights
C-level claims executives from Arch, Aviva Canada, Berkley Mid-Atlantic Group and SageSure have just been announced as speakers for Intelligent Insure

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.