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The Actuary The magazine of the Institute & Faculty of Actuaries

RGA UK to reinsure Rothesay Life longevity risk

The deal, which went into effect 1 July 2011, will secure approximately GBP 1.1 billion present value of future pension payments for a block of approximately 32,000 deferred and retired pensioners.

The block consists of 10 pension schemes, insured by Rothesay Life and its recently acquired sister corporation, Paternoster UK Limited.

Structured as a full indemnity transaction, the reinsurance contract provides benefit payments for the remaining lifetime of the pensioners in exchange for a predetermined fixed series of future reinsurance premiums.

"This is an important transaction for Rothesay Life as we continue our efforts to integrate and risk-manage the Paternoster business," said Addy Loudiadis, CEO of Rothesay Life.

"We are delighted to partner with RGA on such a unique transaction, which involves multiple schemes and requires market-leading underwriting expertise".

David Gulland, managing director of RGA UK added: "With life spans increasing in the UK and worldwide, longevity risk, especially for managers of pensions and annuities, is growing. The solutions RGA provides can play a key role in ensuring the security of the guarantee pension schemes offer to their participants."