Investment - Articles - Mercer complete longevity hedge with MMC UK Pension Fund

 Mercer, advisor to the MMC UK Pension Fund Trustee Limited, announced the completion of a longevity hedge covering approximately £2bn of liabilities for around 14,500 pensioner, deferred and active defined benefit (DB) members of the MMC UK Pension Fund.

 This longevity swap to protect against the financial implications of increasing life expectancy, innovatively includes active members and is the second largest UK pension fund swap covering more non-pensioner members than pensioners. The longevity risk was insured via a ‘captive’ Guernsey insurance cell and simultaneously reinsured with Munich Re.

 Trustee Chairman, Bruce Rigby, said, “We see this additional longevity hedge as a natural next step as we look to reduce risk within the fund. The trustee and Marsh McLennan commissioned a full market review of the whole reinsurance market and also selected the ‘Mercer Marsh’ longevity captive solution as the route to implement this longevity hedge.”

 This transaction follows the fund’s £3.4bn pensioner longevity swaps previously transacted in 2017 with two other global reinsurers in respect of DB sections’ longevity risk. This transaction is a further significant de-risking step with nearly all of the MMC UK Pension Fund’s DB sections’ longevity risk now insured.

 Suthan Rajagopalan, lead transaction adviser for the trustee and Head of Longevity Reinsurance at Mercer, commented, “What is distinctive about this transaction is that longevity risk of active members is covered as well as over 75 per cent of this longevity swap being comprised of non-pensioners, managing the long-term exposure of the fund to improvements in longevity.”

 The ‘Mercer Marsh’ longevity captive solution uses Guernsey-based incorporated cell company Mercer ICC Limited, managed by Marsh Captive Solutions Guernsey. This transaction used a new incorporated cell, Fission Gamma IC Limited, to transfer risk to Munich Re. MMC Pension Fund Trustee Limited was advised by Mercer, Linklaters and Appleby. Marsh McLennan was advised by Mercer and Herbert Smith Freehills. Fission Gamma IC Limited was advised by Carey Olsen. Munich Re was advised by Fieldfisher and Ogier.

Back to Index

Similar News to this Story

L and G full buy in for Askews Retirement Scheme
Legal & General completes £11m deal securing the benefits of all 86 scheme members. Broadstone’s SM&RT Insure preparation enabled use of L&G’s streaml
Largest single scheme transaction for Boots Pension Scheme
Aon is lead adviser to the Trustee of the Boots Pension Scheme on £4.8 billion buy-in with L&G and Cardano acted as the lead broker to the transaction
Reaction to DB scheme surplus reforms in Autumn Statement
LCP, XPS pensions Group and TPT Retirement Solutions comment as the Government announce they will be consulting this winter on whether changes to rule

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.