What is the End Game?
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This document discusses pension risk management strategies and the pension risk transfer market. It provides an overview of options to transfer pension risk to members, retain risk on the balance sheet, or transfer risk to external entities. It also discusses the growth of longevity swaps and buyouts in 2009 and provides data on transaction volumes and the major players in the pension risk transfer market.
What is the End Game?
- 2. “When a man does not know what harbour he is making for, no wind is the right wind.” Lucius Annaeus Seneca AD 53 What is the End Game? Introduction
- 3. 3 Managing pension risk 1. Transfer to members Change benefit format, e.g. ETVs, Early Retirement 2. Hold risk on balance sheet Matching assets (e.g. LDI, buy-in, longevity swaps) 3. Transfer to external entity Buyout What is the End Game? A game of many parts
- 4. Companies are reacting What is the End Game? Tightening regulation and credit crisis
- 5. Headline deals What is the End Game? What you read in the press
- 6. Headline deals What is the End Game? The year of the longevity swap
- 7. Headline deals What is the End Game? A new generation of Buy-in insurers
- 8. Market Share 2008 2009 • Paternoster remains out of the market citing current regulatory and financial uncertainties • Longevity swaps took off with almost £3bn of transaction completed • AIG wrote its largest buyout yet of £29m in March 2009 despite highly published difficulties by the US parent What is the End Game? The movers and shakers Source: LCP
- 9. 9 Source: Hymans Robertson Buy-out and Buy in deals No of Deals completed 2009 Value of deals completed (£M) Q1 Q2 Q3 Q1 Q2 Q3 Aegon 4 4 3 52 44 38 Alico (formerly AIG) 1 2 3 11 12 8 Aviva 12 11 7 68 23 58 Legal and General 25 16 26 485 219 43 Lucida - - 1 - - 500 MetLife 1 2 3 44 234 120 Paternoster - - - - - - Pension Insurance Corporation 1 2 3 230 72 191 Prudential - - - - - - Rothesay Life - - - - - - Total 44 37 46 890 604 958 What is the End Game? Market volumes Source: Hymans Robertson
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