Prudential Financial and Scottish Widows announce longevity reinsurance deal

Deal involves SGD$2.37 billion of annuity liabilities

Prudential Financial and Scottish Widows announce longevity reinsurance deal

Insurance News

By Paul Lucas

A highly significant longevity reinsurance agreement has been signed by two insurance giants on either side of the Atlantic Ocean.

The Prudential Insurance Company of America, part of Prudential Financial, is taking on around US$1.8 billion (around SGD$2.37 billion) of annuity liabilities held by Scottish Widows, part of Lloyds Banking Group.

“Prudential is privileged to be chosen by Scottish Widows as it seeks to efficiently manage its longevity risk over the coming decades” said David Lang, Prudential’s lead negotiator for this transaction. “With our new partnership, Scottish Widows attains more flexibility for managing longevity risk, trusting that, with PICA, it has chosen a strong counterparty with shared values and a long-term commitment to the longevity risk transfer business.”

Prudential is seen as a global leader in the pension reinsurance market with more than US$45 billion in international reinsurance transactions since 2011 – this includes a US$27.7 billion deal involving the BT Pension Scheme. Now, Scottish Widows is looking to capitalise on this financial strength.

“I am delighted to have completed our first longevity reinsurance transaction with Prudential Financial,” said Michael Downie, finance director, annuities and investment strategy at Scottish Widows. “Their financial strength and long-term commitment to the market was a key consideration for Scottish Widows when selecting a counterparty. Throughout the negotiations, PICA took the time to understand our needs and actively tailored their offering to meet our requirements.”

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