The Trustee of the Merchant Navy Ratings Pension Fund (MNRPF) has used a Guernsey incorporated cell to facilitate a deal with MetLife concerning longevity risk in relation £450m of pensioner and dependant liabilities.
According to Ci DataHub, MNRPF is utilising Foxtrot IC Limited, an incorporated cell formed in June 2024 and part of Willis Towers Watson Guernsey ICC Limited.
The transaction is structured as an insurance contract with Foxtrot with onward reinsurance placed with MetLife.
“I am delighted that the Trustee has taken an important step to ensure that our members’ benefits are strongly secured against increases in life expectancy,” said Melanie Cusack, Trustee at MNRPF.
“This is a continuation of our de-risking journey, and we are pleased to have completed the deal with attractive economics. This is a positive step in providing both additional security for members’ pensions and certainty for employers.”
Guernsey incorporated cells have proved popular vehicles for conducting pension longevity swaps for the past 10 years.
In 2014 the BT Pension Scheme Trustees Limited established BTPS Insurance ICC Limited, managed by Artex, and completed its first longevity transaction covering £16bn of liabilities. BTPS Insurance ICC Limited now has two active cells.
In 2015 the Merchant Navy Officers Pension Fund (MNOPF) worked with WTW on a similar deal to hedge £1.5bn of liabilities utilising an incorporated cell – MNOPF IC Limited – which was dissolved in 2022.
In this latest deal, WTW acted as lead adviser to the MNRPF Trustee, while the cell captive is managed by WTW Guernsey.
Shelly Beard, managing director at WTW and lead adviser to the Trustee, said: “This transaction demonstrates that longevity swaps are an option for smaller tranches of liabilities.
“We worked with the Trustee to achieve a competitive reinsurer selection process and attractive economics relative to the Fund’s reserves. It was a pleasure to work with MetLife to agree a transaction that met their, and the Trustee’s, objectives, and to ensure that the Trustee’s future flexibility is maximised.”
Jay Wang, Head of Risk Solutions at MetLife, said: “MetLife’s long history and expertise in risk management positions us well to offer greater certainty for MNRPF in relation to its longevity risk.
“We are pleased to have been selected for the reinsurance of this transaction. This transaction demonstrates MetLife’s commitment to supporting solutions which help pension schemes and insurers manage longevity risk.”