The Merchant Navy Officers Pension Fund (MNOPF) is the latest
scheme to utilise a Guernsey captive to hedge £1.5bn of its
longevity risk, reports Captive Review.
The MNOPF has worked with Towers Watson to complete the
transaction which used MNOPF IC Limited - a cell within Towers
Watson ICC - to reinsure the risk with Pacific Life Re.
"Longevity was a significant, concentrated risk for the
fund and, having considered the different options available, the
trustee board decided that Towers Watson's Longevity Direct
structure was the most cost effective and efficient
structure," said Rory Murphy, MNOPF Chairman.
"This, combined with attractive reinsurer pricing, allowed
us to hedge longevity risk without any material impact on our
broader journey plan."
Captive Review reported in December that Towers Watson had
established its incorporated cell company and was expected to begin
adding clients to individual cells. The pension longevity risk boom
in Guernsey was sparked by the BT Pension Scheme £16 billion
transfer using BTPS ICC, managed by Artex, to American insurer
Shelly Beard, Senior Consultant at Towers Watson, said accessing
the reinsurance market through cell structures was making the
hedging of pension risk more affordable for the schemes.
"It also reduces the complexity that is often associated
with longevity hedging - the contractual negotiations on this
transaction took less than two months," she said.
An original version of this article was first published
byCaptive Review, January
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