Aviva announces record 5 billion pound longevity swap

LONDON, March 6 Thu Mar 6, 2014 7:31am EST

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LONDON, March 6 (Reuters) - British insurer Aviva has agreed to transfer the risk of members of its staff pension scheme living longer than expected for 5 billion pounds ($8.37 billion), the largest ever such deal.

Longevity swaps, which involve a pension scheme hiving off the risk that pensioners outlive expected life-spans to insurers, form a growing market amid rapidly increasing life expectancy.

But the Aviva swap is the first of its kind in that it is transferring the risk directly to a number of reinsurers directly rather than going through a single insurance company which would traditionally act as an intermediary.

"The trustee is delighted to have taken another important step in our ongoing process to improve further the level of security of all our members' benefits," said Sir Ian Prosser, chair of trustees for the Aviva Staff Pensions Scheme, in a statement on Thursday.

Aviva's transaction represents more than half of the total 8.9 billion pounds of longevity swaps in 2013.

The deal was brokered by Hymans Robertson and Linklaters.

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