General Insurance Article - Pension Corporation & Munich Re reinsure longevity risk

 Pension Insurance Corporation today announces that it has hedged £300 million of longevity risk through reinsurance with Munich Re, the global reinsurer.

 This transaction builds on the company’s extensive use of longevity reinsurance as a key component of its risk management strategy. In January 2011 PIC announced a £500 million reinsurance transaction with other global reinsurers. PIC has now reinsured approximately 65% of its longevity exposure, representing around £3.5 billion of its total liabilities. PIC also hedges its total exposure to interest rate and inflation risk.

 This reinsurance transaction complements what has been a very successful year so far for PIC, which has concluded approximately £1.1 billion of new business in 2012, including the recently announced transactions with Aon Minet, Gartmore and Cookson plc.

 Rob Sewell, Chief Financial Officer at Pension Insurance Corporation, said: “Our strong new business performance so far this year demonstrates the very high demand for defined benefit pension insurance solutions, even against a difficult macro-economic environment. It is vital that we maintain our focus on securing our existing policyholders’ pensions for the long-term and this reinsurance transaction helps to further protect us against the very long-dated risks we face. We are delighted to have been able to work with Munich Re on the transaction.