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Formal UK superfunds authorisation could take 5 years
Formal UK superfunds authorisation could take 5 years
The UK Pensions Regulator anticipates that it could take five years for the government to put in place a statutory authorisation framework to oversee defined benefit superfunds, as it looks ahead to publishing specific guidance for trustees considering a transfer to the new vehicles.
#ART#Longevity#Pensions
·pensions-expert.com·
Formal UK superfunds authorisation could take 5 years
World Bank shelves plan for PEF 2.0 & further pandemic cat bonds: Report
World Bank shelves plan for PEF 2.0 & further pandemic cat bonds: Report
Media reports state that the World Bank has shelved plans for any future issuance of pandemic catastrophe bonds and for a version two of its Pandemic Emergency Financing Facility (PEF). The major objections to the PEF and the use of catastrophe bonds, or any kind of private market insurance or reinsurance capacity to support it, seems to be in paying for protection at all, when critics claim the World Bank can easily just disburse capital and loans to support affected countries.
#ART#CAT#ILS#Mortality#Pandemic
·artemis.bm·
World Bank shelves plan for PEF 2.0 & further pandemic cat bonds: Report
Pandemic bonds: execution risk
Pandemic bonds: execution risk
The well-meaning World Bank pandemic bonds, launched in the wake of the Ebola pandemic in 2017, had several design flaws. They were massively complex: the prospectus ran to 386 pages and set out multiple triggers for payment, based around outbreak size, growth and spread. Eligibility criteria was all over the shop. Funding was aimed at the world’s poorest 70-odd countries, but payment was triggered by cases in a larger group. Still, failure of the bonds should not dismiss the concept of transferring risk to the markets. Appetite remains; witness the increase in life insurance sales after Sars. Time for the private sector to take up the baton.
#ART#ILS#CAT#Pandemic#Mortality
·ft.com·
Pandemic bonds: execution risk
UBS pension gets £1.4bn longevity swap from Zurich & Canada Life Re
UBS pension gets £1.4bn longevity swap from Zurich & Canada Life Re
The UBS (UK) Pension and Life Assurance Scheme has entered into a £1.4 billion longevity swap arrangement, with global player Zurich acting as the insurer for the transaction and Canada Life Re providing reinsurance capital. It was structured as a “pass through” insurance contract with Zurich Assurance Ltd., with the risk immediately 100% backed by reinsurance from Canada Life Re through its The Canada Life Assurance Company entity.
#ART#Longevity#Pensions
·artemis.bm·
UBS pension gets £1.4bn longevity swap from Zurich & Canada Life Re
UBS pension scheme enters into £1.4bn longevity hedge
UBS pension scheme enters into £1.4bn longevity hedge
The UBS (UK) Pension and Life Assurance Scheme has entered into a £1.4bn longevity hedge with Zurich Assurance, designed to protect the scheme against the risk of the 2,700 members covered living longer than expected. The deal has been billed as an “innovative pass through” arrangement, with 100 per cent of the longevity risk reinsured by Canada Life Assurance Company.
#ART#Longevity#Pensions
·pensions-expert.com·
UBS pension scheme enters into £1.4bn longevity hedge
Negative interest rates can be a doom loop for pension investors
Negative interest rates can be a doom loop for pension investors

Alongside ballooning pension liabilities, the timing of falling rates has been most inopportune. They have shrunk the income from bond portfolios traditionally used to fund regular payouts just when ageing member demographics have been forcing pension plans to de-risk their portfolios by loading up on bonds — only to discover that they deliver a pittance.  The latest data from pension consultancy Mercer show that 64 per cent of plans across Europe were in negative cash flow territory in 2019 — there was more money going out to retirees than was coming in from investments and monthly contributions. And 91 per cent of them are now forced to raid their capital base to bridge the gap, bearing a worrying resemblance to a Ponzi scheme.

#ART#Longevity#Pensions#NegativeRates
·ft.com·
Negative interest rates can be a doom loop for pension investors
Prudential Retirement closes $1.7 billion in new longevity reinsurance transactions in first half of 2020
Prudential Retirement closes $1.7 billion in new longevity reinsurance transactions in first half of 2020
Prudential Retirement closed $1.7 billion in new longevity reinsurance transactions during the first half of the year, attributing success to pivoting quickly to virtual closings during the COVID-19 global pandemic and a vibrant smaller end of the U.K. pension buy-in and buy-out market. They see a robust pipeline in the U.K. for the second half of 2020 and the longevity reinsurance market ending the year strong.
#ART#Longevity#Pensions#Pandemic
·news.prudential.com·
Prudential Retirement closes $1.7 billion in new longevity reinsurance transactions in first half of 2020
Liberty Mutual in $100m Limestone Re 2020-2 reinsurance sidecar issuance
Liberty Mutual in $100m Limestone Re 2020-2 reinsurance sidecar issuance
Liberty Mutual has successfully closed on another collateralised reinsurance sidecar placement for 2020, with a $100 million of notes issued by its Limestone Re Ltd. sidecar. The re/insurer has returned regularly each year with transactions since launching Limestone Re back at the end of 2016 with a first $160 million deal that ceded a mix of U.S. property catastrophe, U.S. homeowners and London Market specialty insurance business to ILS investors.
#ART#ILS#CAT
·artemis.bm·
Liberty Mutual in $100m Limestone Re 2020-2 reinsurance sidecar issuance
Aon's Randolph Re platform issues $50.25m private cat bond
Aon's Randolph Re platform issues $50.25m private cat bond
A $50.25 million private catastrophe bond transaction has been issued around the July renewal by broker Aon’s private catastrophe bond issuance and placement platform Randolph Re. This is the first transaction to have come to light from Aon’s Randolph Re platform and likely saw the broker helping a cedent to access sources of capital markets backed reinsurance or retrocession through a securitised offering.
#ART#CAT#ILS
·artemis.bm·
Aon's Randolph Re platform issues $50.25m private cat bond
Catastrophe bond & ILS issuance hits $9.6bn as spreads accelerate
Catastrophe bond & ILS issuance hits $9.6bn as spreads accelerate
Issuance of new catastrophe bonds continued apace through early July, helping total cat bond and related ILS issuance reach $9.6 billion as of this time. Given the large amount of maturing cat bonds this year, outstandings have shrunk slightly in recent weeks, currently sitting at $41.14 billion, down from $41.5 billion at the end of June but still up on the $40.7 billion at the end of December 2019.
#ART#ILS#CAT
·artemis.bm·
Catastrophe bond & ILS issuance hits $9.6bn as spreads accelerate
Artemis Bermuda ILS Executive Roundtable 2020
Artemis Bermuda ILS Executive Roundtable 2020
Welcome to Artemis’ fifth Bermuda-focused ILS executive roundtable, which owing to restrictions caused by the ongoing Covid-19 pandemic was held virtually.
#ART#ILS#CAT
·artemis.bm·
Artemis Bermuda ILS Executive Roundtable 2020
Prudential cites resilience of UK longevity market despite COVID, as it closes $1.7bn of deals
Prudential cites resilience of UK longevity market despite COVID, as it closes $1.7bn of deals
The UK market for longevity risk transfer and reinsurance has remained resilient during the Covid-19 pandemic, according to Prudential Retirement, a business unit of Prudential Financial, Inc., which has closed $1.7 billion of longevity reinsurance deals in the first-half of this year. Prudential has highlighted the growing number of smaller pension risk transfer transactions in the UK market, which has helped to keep longevity reinsurance deals flowing.
#ART#Longevity#Pensions#Pandemic
·artemis.bm·
Prudential cites resilience of UK longevity market despite COVID, as it closes $1.7bn of deals
Eclipse Re issues two private cat bonds totalling $56.6m
Eclipse Re issues two private cat bonds totalling $56.6m
Eclipse Re, the Horseshoe managed private syndicated collateralised reinsurance note and private cat bond platform, has completed two new transactions, amounting to just under $56.6 million of risk capital issued around the mid-year renewal season. The vehicle completed and listed a $16.59 million Eclipse Re Ltd. (Series 2020-03A) transaction and a $40 million Eclipse Re Ltd. (Series 2020-04A) transaction. The notes issued under both of the transactions have been placed with qualified investors and admitted to the Bermuda Stock Exchange (BSX) as insurance-related securities.
#ART#ILS#CAT#UnitedStates
·artemis.bm·
Eclipse Re issues two private cat bonds totalling $56.6m
New Financial Instruments for Managing Longevity Risk
New Financial Instruments for Managing Longevity Risk
Reduced returns and longevity risk are making it challenging for employers to offer defined benefit pensions. In countries with large defined benefit pension plan sectors, sponsors are transferring these obligations, and the associated investment and longevity risk, to life (re)insurers via buy-outs, buy-ins, and longevity swaps. Nevertheless, to date, there has been no successful longevity bond issuance, although there have been several false starts. This contrasts with the active market for catastrophe bonds that transfer risk associated with catastrophic events from (re)insurers to capital markets. This paper reviews catastrophe bond and other insurance risk transfer market developments, to identify the factors and design features that have resulted in success and failure. Conclusions are informed by an extensive literature review and quantitative survey, plus discussions with market participants including public policy makers. It concludes with suggestions for product design features and public policies that might kick start vibrant longevity bond markets.
#ART#CAT#Longevity#Pandemic
·repository.upenn.edu·
New Financial Instruments for Managing Longevity Risk
Will superfunds come to the rescue of UK pensions?
Will superfunds come to the rescue of UK pensions?
U.K. regulators have given the green light for the creation of “pension superfunds” — commercially run entities capable of pooling final salary schemes from different employers and running them as one large fund. Before superfunds arrived on the scene, increasing numbers of companies were going down the buyout route, paying insurance companies to take over the running of their pension schemes. Offloading pension liabilities to a third-party may seems like an attractive long-term solution — but it also an expensive and tightly regulated market. Although the superfunds market is in its infancy, looser regulatory requirements means it could provide a much cheaper way of doing this. Pooling several schemes together should, in theory, make them cheaper and more efficient to run — but in return, operators expect to make a profit, which has attracted controversy.
#ART#Longevity#Pensions#SuperFunds
·ft.com·
Will superfunds come to the rescue of UK pensions?
Hong Kong aims for functioning ILS regulatory regime by early 2021
Hong Kong aims for functioning ILS regulatory regime by early 2021
The Legislative Council of the Government of Hong Kong has now passed its new insurance legislation to allow for insurance-linked securities (ILS) such as catastrophe bonds to be issued there. The Insurance (Amendment) Bill 2020 provides for the establishment of an ILS specific special purpose insurer (SPI) structure with uses possible for catastrophe bonds, as well as other collateralised reinsurance arrangements. The SPI will be enable insurance and reinsurance risks to be transferred to institutional investors, while fully collateralising its obligations.
#ART#ILS#CAT#Regulation
·artemis.bm·
Hong Kong aims for functioning ILS regulatory regime by early 2021
EIOPA calls for ILS role in pandemic risk, but warns on correlations
EIOPA calls for ILS role in pandemic risk, but warns on correlations
The European Insurance and Occupational Pensions Authority (EIOPA), has highlighted the potential role of the capital markets and insurance-linked securities (ILS) in risk transfer and reinsurance facilities to support pandemic insurance provision. The organisation calls for “skin in the game” from all parties, public and private, to ensure alignment and capacity is available for the size of the pandemic threat that Covid-19 has now made clear. It also highlights the challenge with large systemic risks such as pandemics and how they can correlate with capital market movements, making ILS solutions sometimes less viable.
#ART#ILS#CAT#Pandemic
·artemis.bm·
EIOPA calls for ILS role in pandemic risk, but warns on correlations
Littlewoods scheme buys in remaining £930m with Rothesay
Littlewoods scheme buys in remaining £930m with Rothesay
The Littlewoods Pensions Scheme has secured almost £1bn of its defined benefit liabilities with insurer Rothesay Life, with the plan’s pension promises now completely covered by bulk annuity contracts. The £930m transaction, announced on Wednesday, secures the pensions of 6,454 members, 90 per cent of which are deferred. It adds to a 2018 buy-in of pensioner liabilities with Scottish Widows, worth £880m.
#ART#Longevity#Pensions
·pensions-expert.com·
Littlewoods scheme buys in remaining £930m with Rothesay
Siemens completes £530m buy-in with L&G
Siemens completes £530m buy-in with L&G
Industrial manufacturer Siemens has completed a £530m* buy-in for Siemens Benefits Scheme with Legal & General, covering more than 2,000 pensioners. The deal follows a previous bulk annuity transaction made in 2018, with the company opting for an umbrella contract with L&G, which will allow potential future transactions to be completed when the time and market conditions are right, the insurer stated.
#ART#Longevity#Pensions
·pensions-expert.com·
Siemens completes £530m buy-in with L&G
Farmers Could Soon Be Hedging Their Risks With Decentralized Weather Data
Farmers Could Soon Be Hedging Their Risks With Decentralized Weather Data
Arbol, a platform that allows farmers to hedge weather risks, is integrating Chainlink data oracles. With blockchain, settlements and payouts can be instant, whereas in the centralized world, participants may have to wait weeks, if not months. Farmers can hedge against various adverse weather conditions having a negative impact on their crops. They can buy a hedge — for example, if a temperature in their region reaches a critical level, which will trigger an automatic payout. By adding Chainlink’s oracalized weather data feeds, the company’s platform has become more decentralized and resilient.
#Fintech#ART#Blockchain#Chainlink
·cointelegraph.com·
Farmers Could Soon Be Hedging Their Risks With Decentralized Weather Data
Pension De-Risking and Firm Risk: Traditional versus Innovative Strategies
Pension De-Risking and Firm Risk: Traditional versus Innovative Strategies
This paper investigates which U.K. FTSE 100 firm financial and pension fund characteristics influence de-risking strategy choices and their impact on firm risk, proxied with earnings and return volatility, default and credit risk. Results show that de-risking strategies are more likely to be implemented when pensions have a longer investment horizon, indicating a higher level risk exposure due to investment uncertainty. It finds that firms with larger pension plans prefer innovative de-risking strategies (buy-in/buy-out and longevity swap), as these reduce the risk more effectively removing various pension fund risk altogether, over the traditional ones (soft and hard freezing). Firms with higher market capitalisation and that are financially unconstrained implement innovative pension de-risking strategies as they have the ability to pay the cash premiums required. We also find that pension de-risking strategies reduce firm risk. Hard freezing and pension buy-ins/buy-outs have the most significant impact in reducing firm risk. In contrast, soft freezing nd longevity swaps tend to have a weaker or no impact on the overall firm risk.
#ART#Longevity#Pensions
·pensions-institute.org·
Pension De-Risking and Firm Risk: Traditional versus Innovative Strategies
ILS capital down 2.7% in H1. COVID uncertainty to affect capital raising: GC
ILS capital down 2.7% in H1. COVID uncertainty to affect capital raising: GC
According to reinsurance broker Guy Carpenter the amount of alternative capital in the market, across insurance-linked securities (ILS) funds, collateralised reinsurance structures and catastrophe bonds, shrank by approximately 2.7% in the first-half of this year. This is down to the current mindset of investors who continue to assess the uncertainty associated with COVID-19 and prepare for the possibility of trapped capital for a prolonged period of time. In addition, there is an ongoing reevaluation of the perceived lack of correlation, when it comes to ILS and reinsurance, for systemic, borderless risks such as a pandemic.
#ART#ILS#CAT#Pandemic
·artemis.bm·
ILS capital down 2.7% in H1. COVID uncertainty to affect capital raising: GC
Small bulk annuity transactions increase 20%
Small bulk annuity transactions increase 20%
The first half of 2020 saw a near 20% increase in the number of U.K. bulk annuity transactions under £100m, when compared with the same period last year, according to Aon. Several factors that contributed for favourable conditions for smaller transactions. First, there were fewer jumbo transactions in the market compared with last year, which has meant insurers have had more capital and manpower to deploy across a wider spectrum of transactions. Second, there was an increase in the use of streamlined auction processes for smaller transactions, which particularly helped during recent volatile market conditions. Finally, insurers have invested in technology and operational capacity at the smaller end of the market, to increase supply for smaller schemes looking to derisk. https://www.aon.com/unitedkingdom/media-room/articles/aon-sees-increase-in-smaller-bulk-annuity.jsp
#Longevity#Pensions#ART
·pensions-expert.com·
Small bulk annuity transactions increase 20%
Hitachi completes £275m buy-in with L&G
Hitachi completes £275m buy-in with L&G
The Hitachi UK Pension Scheme has agreed a £275m buy-in transaction with Legal & General that covers the remaining deferred members and retirees, after a similar deal in 2018 with Scottish Widows. Hitachi trustees were advised on the transaction by Aon, while legal advice was provided by Pinsent Masons. Macfarlanes provided legal advice to L&G. This transaction completes the scheme’s phased buy-in journey in just under three years — substantially ahead of the original target of 10 years. This acceleration has been possible due to strong asset performance, favourable insurance pricing, good preparation and nimble decision making by both the trustee and the companies.
#ART#Longevity#Pensions
·pensions-expert.com·
Hitachi completes £275m buy-in with L&G
UK DB Funding Code of Practice Consultation Is there a pot of gold at the end of the rainbow?[1]
UK DB Funding Code of Practice Consultation Is there a pot of gold at the end of the rainbow?[1]
Central to this consultation on the principles to be used by the new code is the new requirement that all DB schemes should have the same long-term objective (LTO)-that all schemes adopt as their LTO a self-sufficiency (SS) position called a low dependency basis (LDB) in the code at some horizon and to plot a journey towards this. This LTO ensures that schemes can be near certain of meeting liabilities at some time horizon from a low risk portfolio without any further support from sponsors.  The term LDB reflects the belief that even with this portfolio limited calls on sponsors may still be necessary in the event of unplanned problems. This approach is meant to protect the scheme from the risk of sponsor insolvency and the variability of growth assets but puts stress on the sponsor to provide adequate contributions.
#Pensions#Regulation#ART#Longevity
·henrytapper.com·
UK DB Funding Code of Practice Consultation Is there a pot of gold at the end of the rainbow?[1]
Marathon scheme completes £610m buy-in with Rothesay Life
Marathon scheme completes £610m buy-in with Rothesay Life
Oil and gas production company RockRose has completed a full £610m buy-in with Rothesay Life for the Marathon Service Limited Pension and Life Assurance Scheme. RockRose, which bought Marathon Oil’s UK business in 2019, initiated the transaction after identifying an opportunity on the back of beneficial market movements arising from Covid-19. The sponsor then worked closely with the trustees via a joint working group to lock into pricing quickly.
#Pensions#ART#Longevity
·pensions-expert.com·
Marathon scheme completes £610m buy-in with Rothesay Life
New Financial Instruments for Managing Longevity Risk
New Financial Instruments for Managing Longevity Risk
Reduced returns and longevity risk are making it challenging for employers to offer defined benefit pensions. Nevertheless, in some countries with large defined benefit pension plan sectors, sponsors are transferring these obligations and their associated investment and longevity risks, to life (re)insurers via buy-outs, buy-ins, and longevity swaps. This blog post reviews these developments, to identify the factors and design features that have resulted in success and failure. It conclude with suggestions for product design features and public policies that might kick start vibrant longevity bond markets.
#ART#Longevity#Pensions
·pensionresearchcouncil.wharton.upenn.edu·
New Financial Instruments for Managing Longevity Risk
$10m U.S. wind industry loss transaction issued on Tullett Prebon ILN platform
$10m U.S. wind industry loss transaction issued on Tullett Prebon ILN platform
Electronic and voice interdealer broker Tullett Prebon has successfully completed another issuance through its Insurance Linked Notes (ILN) platform, with a $10 million U.S. wind industry loss instrument arranged, securitised and issued to investors. The platform allows for the securitisation and syndication of industry loss trigger instruments, so typically retrocessional reinsurance arrangements. The latest transaction totals $10 million across protection buyer and seller notes, covering U.S. wind on a per-occurrence basis. The deal features two trigger points of $30bn and $40bn, which could be to define the range of industry losses between which it would payout.
#ART#CAT#ILS
·artemis.bm·
$10m U.S. wind industry loss transaction issued on Tullett Prebon ILN platform
Bulk annuity volumes hit £12.6bn in H1 2020
Bulk annuity volumes hit £12.6bn in H1 2020
Total buy-in and buyout volumes reached £12.6bn in the first half of this year, the second-highest value on record, according to analysis published by LCP. This figure represents a 50 per cent increase when compared with the £7.8bn achieved in the first half of 2018. The Pension Insurance Corporation, Legal & General and Aviva together accounted for 78 per cent of total volumes.
#ART#Longevity#Pensions
·pensions-expert.com·
Bulk annuity volumes hit £12.6bn in H1 2020