Prudential Financial closes $2.6 billion in longevity reinsurance agreements
24 April 2019 - 5:00PM
Business Wire
Activity signals a pre-Brexit rush to de-risk by U.K.
pensions
Prudential Retirement®, a unit of Prudential Financial, Inc.
(NYSE: PRU), has concluded about $2.6 billion in previously
undisclosed longevity reinsurance contracts, an important signal of
an unprecedented start to the 2019 U.K. pension risk transfer
market. As part of these transactions, Prudential Retirement is
assuming the longevity risks of approximately 16,000
pensioners.
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Amy Kessler Prudential Financial (Photo:
Business Wire)
This early 2019 de-risking wave has been driven in part by many
pensions seeking to close agreements prior to the original March 29
Brexit deadline. But with the Brexit deadline extended until late
October, pensions that have not yet transacted have an unexpected
window to move forward and de-risk.
Demand for de-risking solutions has also been driven by the
robust funded status of U.K. schemes, which have improved markedly
since 2016. The funding level of the average U.K. pension scheme
stood at 100.1% on March 29,1 putting many in a favorable position
to reduce risks.
“Pension schemes that can afford to de-risk have raced forward
in the opening months of 2019, taking advantage of the window
before Brexit to reduce their risks and lock in gains,” said Amy
Kessler, head of longevity reinsurance at Prudential Financial.
“Brexit brings increasing levels of uncertainty that could wash
away recent market gains and funding improvements, putting
de-risking out of reach for those with lower hedge ratios. But with
funding at the highest levels in a decade, pensions are de-risking
at an unprecedented pace.”
“Another impetus to de-risk is the notable decline in U.K.
mortality rates during the last 10 months,”2 said Christian Ercole,
vice president at Prudential Financial. “The resulting level of
market activity favors insurers and reinsurers who have invested in
their pricing and analytics teams, and it also favors pension funds
that come prepared with credible and complete data.”
Prudential is a global leader in the pension reinsurance market
with more than $60 billion in international reinsurance
transactions since 2011, including the largest longevity risk
transfer transaction on record, a $27.7 billion transaction
involving the BT Pension Scheme.
About Prudential Retirement
Prudential Retirement delivers retirement plan solutions for
public, private, and nonprofit organizations. Services include
defined contribution, defined benefit and nonqualified deferred
compensation recordkeeping, administrative services, investment
management, comprehensive employee education and communications,
and trustee services, as well as a variety of products and
strategies, including institutional investment and income products,
pension risk transfer solutions and structured settlement services.
With more than 85 years of retirement experience, Prudential
Retirement helps meet the needs of 4.4 million participants and
annuitants. Prudential Retirement has $446.5 billion in retirement
account values as of Dec. 31, 2018. Retirement products and
services are provided by Prudential Retirement Insurance and
Annuity Company (PRIAC), Hartford, Connecticut, or its
affiliates.
Reinsurance contracts are issued by PRIAC or The Prudential
Insurance Company of America (PICA), Newark, N.J. Both are wholly
owned subsidiaries of Prudential Financial, Inc., and each company
is solely responsible for its financial condition and contractual
obligations. Neither PRIAC nor PICA is licensed or regulated by the
U.K. Prudential Regulation Authority as an insurer or regulated by
the Financial Conduct Authority, nor does either conduct business
in the United Kingdom or provide direct insurance to any individual
or entity therein. Prudential Financial, Inc. of the United States
is not affiliated with Prudential plc, a company headquartered in
the United Kingdom.
About Prudential Financial, Inc.
Prudential Financial, Inc. (NYSE: PRU), a financial services
leader with more than $1 trillion of assets under management as of
Dec. 31, 2018, has operations in the United States, Asia, Europe,
and Latin America. Prudential’s diverse and talented employees are
committed to helping individual and institutional customers grow
and protect their wealth through a variety of products and
services, including life insurance, annuities, retirement-related
services, mutual funds and investment management. In the U.S.,
Prudential’s iconic Rock symbol has stood for strength, stability,
expertise and innovation for more than a century. For more
information, please visit news.prudential.com.
1 100.1% – Average funded status for FTSE100 is at 100.1%,
according to Aon Hewitt Global Pension Risk Tracker, March 29,
2019. Funding ratio (cumulative assets/liabilities) of all pension
schemes in the FTSE100 index on the accounting basis.
2 SIAS/CMI – Mortality Improvements Outlook 2019+, April
2019.
1020399-00001-00
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MEDIA:Gregory RothDirect: 973-802-6585Mobile:
973-477-0570gregory.roth@prudential.com
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