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Pensions

Prudential and Aviva strike £1bn de-risking deal

Prudential and Aviva strike £1bn de-risking deal

Mona Dohle
Wednesday 8th August 2018

Prudential Retirement and Aviva Life and Pensions have signed their first longevity reinsurance deal, amid growing demand for de-risking among UK pension schemes.

The agreement will see Prudential’s reinsurance division take on the longevity risk of approximately £1bn of Aviva’s pension liabilities.

Prudential Retirement has recently struck a number of major reinsurance deals, including six deals covering a total of $6bn (£4.66bn) of longevity risk with the Pension Insurance Corporation alone. The firm now holds $433bn (£336bn) in retirement account values.

Funding levels of UK  pension schemes have improved over the past year, driven in particular by a marginal rise in long-term gilt yields, providing relatively affordable opportunities for UK pension schemes to address longevity risks through reinsurance deals.

Amy Kessler, head of longevity risk transfer at Prudential, comments: “Market activity in 2018 is building toward a very strong second half. Rising rates and equities, combined with lower-than-expected longevity improvements, mean that pension schemes are very well-funded and that de-risking is more affordable than ever.”

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