• GBP 800m (USD 1.3 billion) longevity insurance contract covering over 5,000 members of the LV= pension fund
  • The agreement includes insurance for members who have not yet retired
  • The contract insulates the pension scheme from longevity risks for pensioners as well as many older deferred members

Mutual insurance, retirement and investment group LV= has completed a GBP 800 million longevity insurance contract with reinsurer Swiss Re. The transaction includes insurance of longevity exposures for 1,000 members who are still to retire.

The longevity insurance agreement covers over 5,000 individuals who were members of the LV= Employee Pension Scheme as of 31 December 2011. The agreement covers a broader population than previous pension market longevity transactions, extending beyond in payment pensioners to also cover members not yet retired down to age 55.

Philip Moore, LV=’s Chief Financial Officer, said: “The ageing population and increases in life expectancy have created a need for better management of longevity risk across the insurance and pension industries. We are pleased to have worked closely with our pension plan trustees and Swiss Re to find a solution that insulates our pension scheme from much of this risk”

Michael Allen, LV= Trustee Chairman, added “’We are pleased to have concluded this deal which maximises the extent of the longevity coverage by including insurance not just for pensioners but also many of our older deferred members. This is an important step in minimising the risks inherent in LV=’s main staff pension scheme”

The market is becoming more aware of longevity risk and this agreement is the first ever pension plan longevity contract that insures the exposure of members yet to retire.