British Airways’ £5.2bn Airways Pension Scheme has completed a longevity reinsurance transaction with insurers MetLife and Zurich.
The pension scheme, one of two defined benefit (DB) schemes sponsored by British Airways, has transferred the longevity risk related to £340m of its liabilities to Zurich Assurance.
It is the second longevity risk transaction the Airways Pension Scheme has completed this year, and the fifth in total. Previous longevity swaps were converted into a buy-in as part of a £4.4bn bulk annuity deal with Legal & General in 2018.
Zurich has used a “pass through” arrangement to reinsure the risk with Metropolitan Tower Life Insurance Company, a subsidiary of MetLife.
“This deal demonstrates that longevity transactions are an increasingly practical and viable solution for schemes including in relation to smaller tranches of liability.”
Ralph McClelland, Sackers
Shelly Beard, managing director in WTW’s bulk annuity and longevity hedging team and the lead adviser to the trustees, said the deal included the design of an “innovative method for transferring non-pensioner longevity risk”.
“This is the second longevity swap announced in 2024 covering less than £1bn of liabilities, and the fifth in recent years to include non-pensioners, which goes to show that hedging longevity risk in this way is an option available to schemes of all shapes and sizes,” she added.
Ralph McClelland a partner at law firm Sackers and legal adviser to the trustees, said: “This deal demonstrates that longevity transactions are an increasingly practical and viable solution for schemes including in relation to smaller tranches of liability.”
It is the second longevity deal announced this month involving MetLife, following a £450m longevity swap transaction with the Merchant Navy Ratings Pension Fund.
Meanwhile, several large buy-in transactions this year have involved the conversion of longevity swaps – which are held as assets on pension schemes’ balance sheets – including National Grid’s £1.7bn deal with Aviva and the £1.3bn buy-in for the RAC 2003 Pension Scheme, also with Aviva.
