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LCP advises the corporate sponsor on the execution of a £6bn longevity swap by its pension scheme trustees

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LCP has advised the corporate sponsor of a large U.K. pension scheme on the execution of a £6bn longevity swap by its trustees.

The longevity swap removes the risk that pensioners (as well as current and any future dependents) live longer than expected. These longevity and other demographic risks have been reinsured ultimately with the International Reinsurance business of The Prudential Insurance Company of America (PICA), a wholly owned subsidiary of Prudential Financial, Inc. (PFI) (NYSE: PRU), through an independent UK-regulated insurer, Zurich Assurance Ltd., acting as intermediary on a “pass-through” basis.

Myles Pink, partner at LCP said: “LCP provided advice to the corporate sponsor on value-for-money and structuring of the longevity swap to help to ensure that the pricing and terms agreed were consistent with the wider de-risking journey plan agreed between the sponsor and trustees. Particularly important for this transaction was to provide clear advice to the sponsor on a longevity hedging transaction being priced and executed during the global pandemic.

Another key sponsor focus was on ensuring agreement of pragmatic terms and efficient processes for the management of collateral and operation of the longevity swap.  Collaborative working with other advisers and stakeholders was key to successfully providing such wide-ranging advice.”

LCP pensions de-risking update

LCP pensions de-risking update

May 2021

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