Ogier Legal advises on $16bn longevity risk transfer transaction

The Prudential Insurance Company of America recently completed what is believed to be the largest longevity risk transfer transaction to date, having reinsured longevity risk of the BT Pension Scheme. Ogier Legal advised Prudential in Guernsey.

Longevity risk is faced by all providers of defined-benefit pension schemes and has been the subject of a number of deals as schemes have sought to reduce the risk of people living longer. Increased life expectancy increases the liabilities associated with a defined-benefit pension scheme.

The Prudential Insurance Company of America, a subsidiary of Prudential Financial, entered into the reinsurance transaction with the Guernsey-based captive insurer of the BT Pension Scheme, effecting the transfer of a quarter of the scheme’s exposure to increasing longevity and so hedging around $16bn (£9.4bn) of liabilities.

The Ogier deal team that advised the Prudential Insurance Company of America was led by partner William Simpson and managing associate Byron Rees, with assistance from senior associate Michaela Jesson and associate Bourn Collier.

Primary transaction counsel for the Prudential Insurance Company of America were Willkie Farr & Gallagher and Clifford Chance.

Prudential Financial Inc of US is not affiliated with Prudential plc, which is headquartered in the UK.