Prudential cites resilience of UK longevity market despite COVID, as it closes $1.7bn of deals

The UK market for longevity risk transfer and reinsurance has remained resilient during the Covid-19 pandemic, according to Prudential Retirement, a business unit of Prudential Financial, Inc., which has closed $1.7 billion of longevity reinsurance deals in the first-half of this year.

Prudential has highlighted the growing number of smaller pension risk transfer transactions in the UK market, which has helped to keep longevity reinsurance deals flowing.

The company has closed on $1.7 billion in new longevity reinsurance transactions during the first half of 2020, attributing its success to an ability to pivot quickly to virtual closings during the COVID-19 global pandemic and the increasing vibrancy of the smaller end of the UK pension buy-in and buy-out market.

“Innovation comes in many forms and this spring, we found ourselves quickly adapting to an entirely virtual environment,” explained Rohit Mathur, vice president and head of International Transactions for Prudential Retirement.

“While we are now in the midst of incredible uncertainty with the coronavirus, such uncertain times have strengthened our conviction that pension de-risking is an all-weather solution for our institutional client base. For those pension schemes that had de-risked their asset portfolio and that were ready to transact before COVID, there was nothing holding them back from moving forward with their deals,” Mathur continued.

The company believes that the pipeline for these types of pension risk transfer arrangements that require ample longevity reinsurance capacity to support them is robust.

With the UK market showing particular resiliency during Covid-19, leading Mathur to say that he expects a robust pipeline of deals for the second half of 2020 and the longevity reinsurance market ending the year strong.

“Volatile markets often bring opportunity, so it pays to be prepared,” Mathur explained.

“The market is functioning very smoothly, and the smaller end of the market has been quite active,” added Tom Cahill, vice president, longevity reinsurance, Prudential Retirement. “We are proud to have reinsured the risk of many individual schemes in the first half of 2020, including one stand-alone mid-sized transaction and well over a dozen smaller schemes through our flow reinsurance offerings. We are especially proud to be supporting a new insurer on our innovative flow reinsurance platform.”

Prudential advises pension schemes looking to transact during the pandemic that it’s important to, “continue prudent risk management actions with low risk, low volatility investment portfolios, and to set a realistic price target while monitoring funded status and transaction pricing.”

Read about many historical longevity swap and reinsurance transactions in our Longevity Risk Transfer Deal Directory.