Prudential completes $8.7 billion longevity reinsurance transaction with HSBC Bank (UK) Pension Scheme
HSBC Bank (UK) Pension Scheme today announced a captive longevity reinsurance transaction with Prudential Financial, Inc. to transfer longevity risk associated with £7 billion ($8.7 billion) of pensioner liabilities.
The HSBC longevity risk transfer is second only in size to a $27.7 billion transaction Prudential completed with the British Telecom Pension Scheme in 2014, and signals a growing trend of large pension schemes employing captives in these deals.
"While HSBC is the latest pension scheme to take advantage of the captive solution, developed in 2014 for our landmark transaction with British Telecom, we have reached a pivotal moment. The captive approach has become the strategy of choice for large pension schemes seeking to hedge longevity risk," said Amy Kessler, Prudential’s Head of Longevity Risk Transfer. "The HSBC transaction demonstrates the level of credibility and success captive longevity risk transfer transactions enjoy in the current market."