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Aon Hewitt advises Trustees of the PGL Pension Scheme on £900m longevity swap
NYSE:AON

LONDON 21 August 2014 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON) has announced that it was the lead advisor to the Trustees of the PGL Pension Scheme in their longevity insurance transaction with Phoenix Life Limited.  The arrangement provides additional security for the trustees by hedging the longevity risk of around £900m of the scheme's liabilities.

Martin Bird, senior partner and head of the Risk Settlement Group at Aon Hewitt, said:
"This transaction highlights the continuing innovation in the longevity risk transfer market - particularly around ways of accessing the reinsurance market.  Already this year we have seen the BT deal involving the establishment of an insurance vehicle and the Aviva transaction, where an insurance vehicle owned by the scheme sponsor acted as intermediary between the scheme and the reinsurers.

“We expect to see this innovative thinking being sustained in the market over the coming months, making the abundance of longevity capacity available in the reinsurance market more accessible to a range of schemes both very large and small."

The PGL arrangement involved the transfer of the scheme's longevity risk in respect of its pensioners to Phoenix Life Limited.

Matt Wilmington, partner in Aon Hewitt’s Risk Settlement Group, added:
"The arrangement was a win-win for trustees and Phoenix Life, reducing risk in the scheme and allowing the insurer to structure its capital arrangements more efficiently.  We also expect a number of other insurers who are in a similar position with large defined benefit pension schemes to consider a similar type of arrangement.

“In this case, the insurance contract formed part of a funding agreement between the scheme and its sponsor which will also allow the scheme to reduce investment risks further by providing enhanced funding.”

CMS Cameron McKenna was the lead legal advisor to the trustees. Commenting on the transaction, James Parker, partner at CMS Cameron McKenna, said:
“Disintermediation is at the very cutting edge of developments in the longevity market and this transaction is strong evidence of a growing trend. We are delighted to have been able to assist the trustee on this transaction which consolidates CMS' leading position as a legal advisor in the longevity market.”

 

Media Contact: 
Colin Mayes                                       Marina Jane Sanchez
Aon Hewitt                                          Capital MSL
01372 733689                                     020 3219 8811
colin.mayes@aonhewitt.com                marina.jane-sanchez@capitalmsl.com
 

Notes to editors

About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  For more information on Aon Hewitt, please visit www.aonhewitt.com.

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About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.

 

 

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