Aviva Life and Pensions U.K have signed a longevity reinsurance agreement with Prudential Retirement, part of Prudential Financial. The deal is the first such transaction between the pair.
Under the agreement, The Prudential Insurance Company of America (PICA) will assume around £1bn worth of pension liabilities.
Commenting on the alliance, Aviva managing director of defined benefit solutions Tom Ground said: “We’re delighted to have entered into this transaction with PICA. As one of the leading reinsurers, it has the credentials and scale to support our own growth ambitions as we continue to increase deal volumes in the U.K.”
The latest partnership comes amid rising demand for de-risking from the UK.
The demand is being triggered by better finances of UK schemes, which have notably improved since the Brexit vote, and rising pension risk transfer affordability.
Prudential head of longevity risk transfer Amy Kessler said: “Market activity in 2018 is building toward a very strong second half. Rising rates and equities, combined with lower-than-expected longevity improvements, mean that pension schemes are very well-funded and that de-risking is more affordable than ever.
“Leading pension schemes are taking advantage of this favorable environment by locking in gains and transferring risk, knowing that such advantageous markets are always fleeting.”