Prudential Retirement, a unit of Prudential Financial, Inc., and Legal & General Group plc have concluded their sixth longevity reinsurance agreement since 2014.
The Prudential Retirement Insurance and Annuity Company ("PRIAC") has assumed longevity risk for approximately $800 million (£600 million) in pension liabilities held by Legal & General as part of its bulk annuity business. The transaction covered more than 2,000 pensioners.
Legal & General and Prudential now have partnered on six transactions that together reinsure nearly $8 billion in longevity risk.
In a statement, Prudential said that the agreement signaled the resurgent market for longevity reinsurance and de-risking solutions in the United Kingdom in 2017, with market volumes up significantly since the 2016 Brexit vote. The de-risking of pension schemes has become an expectation among shareholders and key stakeholders in companies across the globe, according to the firm.
"Prudential is proud to strengthen its partnership with Legal & General," said David Lang, Prudential's lead negotiator for this transaction. "As a result of these agreements, Legal & General can better manage its longevity risk and secure the retirement benefits of thousands of U.K. pensioners." Prudential's most recent transaction with Legal & General prior to this was in October 2016.
Joyeeta Kanungo, head of new business reinsurance for Legal & General, said, "This transaction marks a furthering of our partnership with Prudential, whose expertise and strength we value highly. The transaction is also another example of longevity reinsurance having a positive impact in enabling U.K. pension schemes to de-risk efficiently with a strong insurer such as Legal & General."
Bill McCloskey, Prudential's head of transactions for international longevity reinsurance, said, "The longevity reinsurance market is more vibrant than ever, especially in the U.K. With this agreement, Legal & General is tapping into Prudential's unique ability to keep up with the huge demand in the market today, and benefits from our use of predictive analytics and the strongest transaction team in the industry. These investments have enabled Prudential to develop and sustain meaningful relationships with its insurance counterparties."