CMS advises on Abbey Life’s £2bn longevity insurance transaction with ScottishPower

CMS London has successfully acted for Abbey Life Assurance Company Limited, the life insurance subsidiary of Deutsche Bank AG, on a £2bn longevity insurance transaction with the Trustee of the ScottishPower Pension Scheme and on Abbey Life’s associated reinsurance arrangements with a number of reinsurers.

Like many major corporates, ScottishPower UK PLC has potentially significant exposure to financial risks associated with continued improvements in pensioners’ life expectancy (longevity risks) in relation to its defined benefit pension scheme.

This longevity transaction, which covers the pension liabilities of around 9,000 members and their contingent dependents, provides the ScottishPower Pension Scheme with a hedge against the longevity risk associated with these members.

The CMS team was led by James Parker, the co-head of the Life, Pensions and Longevity Risk Team, with assistance from partner Mike Munro, consultant Richard Ham, senior associate Lisa Brown, associate Jenny Nanalal, and trainee solicitors Henriika Hara and Ruth Jones. Pensions partner Pete Coyne and tax partner Aaron Fairhurst also assisted on the transaction.

Commenting on the transaction, James Parker said: “We are delighted to have worked with Abbey Life again on another of its major longevity insurance transactions, having previously advised Abbey Life on the BMW UK and Rolls-Royce & Bentley longevity deals. This latest transaction with ScottishPower demonstrates the strength of the UK longevity market and CMS’ involvement with a deal of this size further reinforces the market-leading reputation of our Life, Pensions and Longevity Risk Team.”