The £1bn (€1.2bn) Merchant Navy Ratings Pension Fund (MNRPF) has insured the longevity risk associated with around £450m of pensioner and dependant liabilities.
The insurance has been secured with Metropolitan Life Insurance Company (MetLife) and will form part of MNRPF’s investment portfolio.
The transaction is structured as an insurance contract with a captive insurer in Guernsey and onwards reinsurance to MetLife.
Melanie Cusack, MNRPF trustee, said the deal was a continuation of the pension fund’s de-risking journey, and featured “attractive economics”.
“This is a positive step in providing both additional security for members’ pensions and certainty for employers,” she said.
Jay Wang, head of risk solutions at MetLife, added: “MetLife’s long history and expertise in risk management positions us well to offer greater certainty for MNRPF in relation to its longevity risk.”
WTW acted as lead adviser to the trustee, with Linklaters as legal adviser and Carey Olsen providing additional advice to the trustee. Eversheds Sutherland provided legal advice to MetLife.
Shelly Beard, managing director at WTW and lead adviser to the trustees, said the transaction demonstrated that longevity swaps are an option for smaller tranches of liabilities.
The trustees were also advised by Carey Olsen in Guernsey. The trustee’s captive is managed by WTW Guernsey.
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