International law firm CMS has advised Pacific Life Re International Limited (UK branch) (PL Re) on a c.£1.6bn disintermediated longevity swap with the trustee of the Yorkshire and Clydesdale Bank Pension Scheme (the Scheme).
The swap provides long-term longevity de-risking protection to the Scheme in respect of pensioner liabilities corresponding to c.9,000 members. Zurich Assurance Ltd acts as the insurer intermediary on a complete pass-through basis, pursuant to which PL Re assumes 100% of the longevity risk. CMS advised PL Re on the full suite of transaction documents and took a lead role on the legal drafting and negotiations.
Thomas Lockley, Partner at CMS, comments: “Congratulations to all parties on a successful transaction. Transactions of this size and complexity only come together with a great deal of thought and commitment from all parties and their advisers – those involved should be proud of getting this deal over the line. Pacific Life Re has shown that the longevity swap market continues to play an important role in the growing pensions de-risking market.”
Howie Timothy, Business Development Director at PL Re, adds: “This transaction is the result of a huge amount of collaboration and acts as another great example of how the reinsurance sector can offer strength and capacity to assist pension schemes in meeting their de-risking objectives. As demand for longevity risk transfer increases, Pacific Life Re looks forward to working together with our clients to enable sustainable growth and offer further stability for pension scheme beneficiaries. For this transaction, we sought legal advice from CMS, who has acted for us on a number of previous complex longevity transactions and operated much like an extension to our own team. We greatly appreciate the hard work and expertise provided to us by Thom, Laura and all those involved at CMS.”
CMS is proud to provide ongoing transactional support to PL Re having also advised them on a £3.7bn longevity swap with the trustee of the Prudential Staff Pension Scheme in November 2020, and on a £10bn longevity swap with the trustee of three Lloyds Banking Group pension schemes in January 2020.
The CMS team was led by Thomas Lockley and Laura R Clarke (Financial Services Transactions), with support from Maria Rodia and Katherine Harnett (Pensions); Aleksandra Kalinowska, Michelle Bannon and Jack Eastwood (Financial Services Transactions); Loretta Pugh and Joanna Willems (Data Protection); and Aaron Fairhurst and Alexandra Tuck (Tax).
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