BT Pension gets £5bn longevity swap from RGA Re via captive

The BT Pension Scheme has entered into a UK £5 billion longevity swap arrangement with Reinsurance Group of America (RGA Re), using its captive insurer to intermediate the reinsurance capital.

This is the second longevity swap arrangement that the BT Pension Scheme has entered into, following its landmark £16 billion deal with Prudential Insurance Company of America back in 2014.

That transaction remains the largest pension longevity swap and reinsurance arrangement in our extensive longevity deal directory.

Coming back to offload more of its pensioner linked longevity exposure, the BT Pension Scheme has utilised its own infrastructure to enable it to interface more directly with the reinsurance market.

In this case, the longevity swap reinsurance has been facilitated through an insurance intermediary, using the pension’s existing captive insurer, which it said “efficiently” leveraged its existing infrastructure.

The arrangement increases the protection the BT Pension (BTPS) has from the cost of unexpected increases in the life expectancy of its members.

Otto Thoresen, Chair of Trustees, BTPS said: “Longevity risk is one of the biggest risks facing the Scheme. This transaction helps provide greater certainty for the Scheme, our sponsor and members.”

Wyn Francis, Chief Investment Officer, Brightwell, said: “With this transaction, we’ve taken a fresh approach using technology to drive down the time between quotation and execution. Protecting the Scheme from unexpected rises in life expectancy is a core component to reaching a cash flow matched position by 2034.”

Emma Ferris, Senior Vice President, Global Financial Solutions, RGA UK, said: “We are delighted to have partnered with BTPS to help reduce the longevity risk in the Scheme, using our financial security and longevity expertise to enable the Scheme to focus on its core mission of providing stable and sustainable retirement benefits.”

Brightwell, BTPS’ primary service provider, led the transaction alongside WTW and Allen & Overy, with RGA being advised by Eversheds Sutherland.

View details of many longevity swaps and longevity reinsurance deals in our longevity risk transfer deal directory.