Willis pension scheme resolves its long-term challenges with Guernsey captive solution

22 July 2020

Another pension longevity swap deal has been conducted through Guernsey with the Willis pension scheme using a Guernsey-based captive insurance company established through Willis Towers Watson in the island.

Guernsey has built up a significant stake in this sector in recent years, with a number of deals completed.

The Willis pension scheme arrangement has involved a longevity swap transaction with Munich Re to manage longevity risk in relation to some £1 billion of pensioner liabilities, covering pensions in payment and long-term protection for the scheme against longevity risk, involving some 3,500 scheme members.

"This is a really interesting period of development for our insurance sector. Guernsey is the clear leader in pension longevity and reinsurance structuring, and we are very pleased to have played a role in this swap."
Richard Sharp, Partner, Bedell Cristin 

The longevity risk has been transferred to the reinsurer via a Guernsey-based captive insurance company fully owned by the trustee of the scheme, established under Willis Towers Watson Guernsey ICC Ltd, part of Willis Towers Watson’s ‘Longevity Direct’ solution which allows pension schemes to use a ‘ready-made’ incorporated cell company to access the reinsurance market, without the need for a third party insurance carrier to intermediate.

Ian Aley, Head of Transactions at Willis Towers Watson, and lead adviser, said: “The longevity swap market is currently very buoyant and represents an opportunity for pension schemes such as the Willis Pension Scheme to manage a material risk while retaining the flexibility to achieve the required investment returns to complete their journey plan. Completing this transaction despite some challenging circumstances following the recent lockdown demonstrates how collaborative working can deliver outstanding results.”

Jean-Pierre Bourgaize, Account Manager at Willis Towers Watson in Guernsey, added:

“This is a great deal for Guernsey to be involved in, and great for Willis Towers Watson to be able to solve its own pension challenges in this way. As an island we have a solid track record of doing this kind of business and there is plenty more scope in the market for us to do more of these arrangements with defined benefit pension schemes.”

One of Guernsey’s leading insurance lawyers, Richard Sharp, Partner at Bedell Cristin, was involved in the deal, working with lawyers acting for Munich Re.

"This is a really interesting period of development for our insurance sector. Guernsey is the clear leader in pension longevity and reinsurance structuring, and we are very pleased to have played a role in this swap," he said.

Carey Olsen advised the trustees of the Willis scheme. Partner Konrad Friedlaender, who led the law firm’s team in the deal, said: “The longevity swap transaction solution used here, utilising a Guernsey incorporated cell company (ICC), has become a well-trodden path in recent years because of the flexibility underpinning Guernsey's ICC legislation, and we expect to see further activity in this area in the near future."

Back to News
Download Find a related practitioner