Bedell Cristin advises Munich Re on £1bn longevity swap for the Willis Pension Scheme

Bedell Cristin has advised Munich Re on a £1 billion longevity swap arrangement with the Willis Pension Scheme, in a longevity hedging deal that covers some 3,500 pension scheme members.

The transaction was undertaken using the Longevity Direct solution offered by Willis Towers Watson, which enables pensions to access more directly sources of reinsurance capital by using a cell captive as an insurance intermediating structure sitting between them and the reinsurer.

The £1 billion longevity hedging deal transfers the risk of pensions in payment, offering long-term protection against additional costs that arise because pensioners or their dependants live longer than expected.

The longevity risk was transferred to reinsurance firm Munich Re using a Guernsey based captive insurer that is fully owned by the Trustee of the Pension Scheme, established under Willis Towers Watson Guernsey ICC Limited, the brokers' incorporated cell company structure.

The “ready made” incorporated cell company enables efficient and more direct access to the reinsurance market, without the need for a third party insurance carrier to intermediate the deal.

Martin Lockwood, Head of Longevity at Munich Re, said, “This transaction demonstrates Munich Re’s experience and commitment in the longevity market and its ability to adapt to a challenging working environment.”

The Bedell Cristin team was led by Partner, Richard Sharp who worked alongside Sidley Austin LLP. Richard commented, "This is a really interesting period of development for our insurance sector. Guernsey is the clear leader in pension longevity and reinsurance structuring and we are very pleased to have played a role in this swap”.