The Pension Insurance Corporation (PIC) has completed reinsurance transactions covering £1.4bn of its own longevity exposure.

The transactions are with global reinsurers, including around £1.1bn with Reinsurance Group of America (RGA).

PIC has insured more than £3bn of UK defined benefit (DB) pension scheme liabilities this year, and the company has now reinsured more than £5bn of longevity risk.

Rob Sewell, PIC chief financial officer, said: "2013 has been a very successful year for PIC, having insured more than £3bn of pension scheme liabilities.

"We are delighted with this record year, but also pleased to have been able to efficiently manage out exposure to longevity risk. For each year that life expectancy exceeds predictions, liabilities increase by about 3%.

"We will continue to manage out exposure to longevity risk to help ensure that our policyholders' pensions remain secure for the long-term."

PIC said that as part of its risk management framework it may try to pass some of its longevity exposure on to the reinsurance market as reinsurers may be more efficient holders of this risk because of their offsetting exposure to mortality risk.

First published 26.11.2013

monique_simpson@wilmington.co.uk