The trustee of the £1 billion Merchant Navy Ratings Pension Fund (MNRPF) has entered into a transaction with Metropolitan Life Insurance Company to cover approximately £450 million of pension liability exposure to longevity risk.
The transaction is structured via a Guernsey-based captive insurer owned by MNRPF's trustee and onwards reinsurance to MetLife.
The trustee was advised by Carey Olsen in Guernsey and the trustee's captive is managed by WTW Guernsey.
The Carey Olsen Guernsey corporate team advising on the transaction comprised Senior Associate Arya Hashemi and Partner Tony Lane, who commented: "The management of longevity risk is a key consideration for pension trustees with life expectancy gradually increasing around the world.
"Guernsey is the leading captive insurance domicile in Europe and an important jurisdiction for trustees looking to protect their longevity exposure. We are delighted to have been able to utilise our market-leading expertise to have advised the trustee of MNRPF on this transaction and to assist in bringing this project to a timely conclusion."
The arrangement provides long-term protection to MNRPF against costs resulting from pensioners or their dependents living longer than expected and will form part of MNRPF's investment portfolio.
WTW acted as lead adviser to the trustee, with Linklaters as legal adviser and Carey Olsen providing additional advice to the trustee. Eversheds Sutherland provided legal advice to MetLife.
Mike Johns, Head of Office at WTW Management (Guernsey) Ltd and captive manager, said: "We are delighted to have been able to support the trustee and their advisors on facilitating this transaction through a Guernsey captive vehicle and providing the relevant administrative ongoing management expertise."
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