Pension Insurance Corporation announced this week that it has hedged a substantial part of their longevity risk through reinsurance with Munich Re.

This transaction, worth £300m, builds on the company's use of longevity reinsurance as a key component of its risk management strategy. In January 2011 PIC also announced a £500m reinsurance transaction with other global reinsurers. The firm has now reinsured approximately 65% of its longevity exposure, representing around £3.5bn of its total liabilities. PIC also hedges its total exposure to interest rate and inflation risk.

This reinsurance transaction follows after PIC concluded the year so far with approximately £1.1bn of new business in 2012, including the recently announced transactions with Aon Minet, Gartmore and Cookson plc.

Rob Sewell, chief financial officer at Pension Insurance Corporation, said: "Our strong new business performance so far this year demonstrates the very high demand for defined benefit pension insurance solutions, even against a difficult macro-economic environment. It is vital that we maintain our focus on securing our existing policyholders' pensions for the long-term and this reinsurance transaction helps to further protect us against the very long-dated risks we face. We are delighted to have been able to work with Munich Re on this transaction." 

First published 30.07.2012

azeevalkink@wilmington.co.uk