Home News Captive Insurance Solution Used for Large UK Pension Scheme Deal

Captive Insurance Solution Used for Large UK Pension Scheme Deal

Two hands with a pen pointing to an Individual Retirement Account pamphlet with plan forms beneath it

August 15, 2019 |

Two hands with a pen pointing to an Individual Retirement Account pamphlet with plan forms beneath it

In the second-largest-ever deal of its type, HSBC in Bermuda (advised by Aon) set up a £7 billion captive-insurance-based pension longevity swap, involving the HSBC Bank (UK) Pension Scheme and Prudential Insurance Company of America (PICA).

The deal used a captive insurance solution with an HSBC-owned, Bermuda-based insurer. PICA provided reinsurance for the transaction related to around half the scheme's pensioner liabilities.

Tom Scott, principal consultant in Aon's risk settlement team, said, "This landmark transaction in which we supported HSBC in Bermuda represents another step forward in terms of innovation, with captive structures and other types of insurance structures now enabling even the very largest schemes to access the reinsurance market in an effective manner."

Martin Bird, senior partner and head of risk settlement at Aon, said, "We continue to see very strong demand for pension scheme derisking solutions, whether in bulk annuity or longevity-only formats—and 2019 remains on course to be another record-breaking year for this market."

August 15, 2019