Prudential Retirement®, a unit of Prudential Financial, Inc.
(NYSE:PRU), and Aviva Life and Pensions U.K. Ltd. have struck their
first longevity reinsurance transaction, establishing a new
reinsurance partnership between these two market leaders. As part
of the transaction, The Prudential Insurance Company of America
(PICA) assumes the longevity risk for approximately £1 billion
(nearly $1.4 billion) in pension liabilities.
This agreement comes amid surging demand for de-risking from the
U.K., where pension insurers are increasingly seeking to manage
their risk and capital with longevity reinsurance arrangements.
Demand is also driven by the increasing affordability of pension
risk transfer, reflecting attractive pricing and the enhanced
capacity of insurers, as well as the improved finances of U.K.
schemes, many of which are approaching full funding.
“We are delighted to establish a new relationship with Aviva,”
said William McCloskey, Prudential’s head of international
transactions for longevity reinsurance. “Over the last several
years, Aviva has become a premier pension insurance provider, one
that has made thoughtful investments in its capabilities to support
the continued expansion of the U.K. pension risk transfer market.
We are thrilled to collaborate and partner with Aviva on such an
important agreement.”
Tom Ground, managing director of defined benefit solutions at
Aviva, said: “We’re delighted to have entered into this transaction
with PICA. As one of the leading reinsurers, it has the credentials
and scale to support our own growth ambitions as we continue to
increase deal volumes in the U.K. We hope this deal is just the
start of a longer-term relationship.”
Amy Kessler, head of longevity risk transfer at Prudential,
added: “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. Leading pension schemes are taking advantage of this
favorable environment by locking in gains and transferring risk,
knowing that such advantageous markets are always fleeting.”
The agreement follows at least 10 others in the market during
the last 12 months that have exceeded $1 billion in size.
Collectively, these U.K. longevity reinsurance and longevity swap
agreements signify a noticeable market surge, driven by pension
schemes eager to capitalize on their improved funded status, and
take risk off the table.
Funding levels of U.K. pension schemes have improved markedly
since the Brexit vote of 2016, boosted by fresh contributions,
strong investment performance and higher gilt yields (which lower
the present value of future liabilities).
Prudential is a global leader in the pension reinsurance market
with more than $50 billion in international reinsurance
transactions since 2011, including the largest longevity risk
transfer transaction on record, a $27.7 billion transaction
involving the BT Pension Scheme.
About Aviva
Aviva provides life insurance, general insurance, health
insurance and asset management to 33 million customers. In the
U.K., we are the leading insurer serving one in every four
households and have strong businesses in selected markets in
Europe, Asia and Canada. Our shares are listed on the London Stock
Exchange and we are a member of the FTSE 100 index.
Aviva’s asset management business, Aviva Investors, provides
asset management services to both Aviva and external clients, and
currently manages over £350 billion in assets. Total group assets
under management at the Aviva group are £490 billion. Aviva helps
people save for the future and manage the risks of everyday life;
we paid out £34.6 billion in benefits and claims in 2017. By
serving our customers well, we are building a business which is
strong and sustainable, which our people are proud to work for, and
which makes a positive contribution to society.
About Prudential Financial, Inc.
Prudential Financial, Inc. (NYSE:PRU), a financial services
leader with more than $1 trillion in assets under management as of
June 30, 2018, has operations in the United States, Asia, Europe,
and Latin America. Prudential’s diverse and talented employees are
committed to helping individual and institutional customers grow
and protect their wealth through a variety of products and
services, including life insurance, annuities, retirement-related
services, mutual funds and investment management. For more
information, please visit news.prudential.com.
Prudential Retirement delivers retirement plan solutions for
public, private, and nonprofit organizations. Services include
defined contribution, defined benefit and non-qualified deferred
compensation recordkeeping, administrative services, investment
management, comprehensive employee education and communications,
and trustee services, as well as a variety of products and
strategies, including institutional investment and income products,
pension risk transfer solutions and structured settlement services.
With more than 85 years of retirement experience, Prudential
Retirement helps meet the needs of 4.3 million participants and
annuitants. Prudential Retirement has $433 billion in retirement
account values as of June 30, 2018. Retirement products and
services are provided by The Prudential Insurance Company of
America (PICA), Newark, N.J., or its affiliates.
Reinsurance contracts are issued by either Prudential Retirement
Insurance and Annuity Company (PRIAC), Hartford, Conn., or PICA.
Both are wholly owned subsidiaries of Prudential Financial, Inc.,
and each company is solely responsible for its financial condition
and contractual obligations. Neither PRIAC nor PICA is licensed or
regulated by the U.K. Prudential Regulation Authority as an insurer
or regulated by the Financial Conduct Authority, nor does either
conduct business in the United Kingdom or provide direct insurance
to any individual or entity therein. Prudential Financial, Inc. of
the United States is not affiliated with Prudential plc, a company
headquartered in the United Kingdom.
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version on businesswire.com: https://www.businesswire.com/news/home/20180808005038/en/
MEDIA:Prudential Financial:Gregory Roth,
973-802-6585Mobile: 973-477-0570gregory.roth@prudential.com
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