UK - UBS Investment Bank is to enter the longevity swap market following the hire of a four-strong pensions team, sources said.
The EMEA pensions team - which previously worked at Paternoster and has experience in structuring a range of pension scheme de-risking solutions - will become part of UBS's recently formed fixed income, currencies & commodities EMEA insurance & pensions industry group, which was launched this month.
GP sister title Professional Pensions has learned UBS will launch a longevity swap product as soon as possible after the new team joins next week - and had already done much of the preparatory work for the launch.
However, UBS is unlikely to follow the Goldman Sachs / Rothesay Life model of setting up an insurance subsidiary and would ultimately want to pass all the risk onto third-party insurers - warehousing the risk only for a short period of time.
It is expected the pensions team will also provide advisory services to UBS's corporate clients on all elements of risk within their pension funds - and also work closely with the bank's equity and asset management businesses.
Tesula Mohindra, who has been appointed as managing director, and Ian Aley, who has been hired as executive director, will focus on business development and report to UBS co-head of EMEA debt capital markets Mahnaz Safa.
David Still, who has joined as executive director, and Tim Coulson, who becomes a director, will focus on actuarial and pricing activities and report UBS EMEA head of private side structuring Andrea Sambo.
Commenting on the appointments, Safa said: "The insurance and pensions industry in EMEA is developing rapidly in response to regulatory changes and pressure on performance. The implementation of Solvency II will fundamentally change the way insurance clients manage risk and capitalise their business lines, while pension funds are also looking to proactively manage the realistic risks inherent within their schemes.
"We aim to be a leading provider of risk advisory and capital markets products to insurance and pension fund clients and the addition of this team to UBS is a key step in the building of a first-class insurance and pensions business."
Hymans Robertson senior liability management specialist James Mullins said the move was "no surprise".
He said: "It is no surprise that another investment bank has decided to offer risk transfer solutions, recognising the rapidly growing demand from UK pension scheme schemes to reduce their risks.
"Hymans Robertson is seeing significant interest in this area and I expect that risk transfer deals (including longevity swaps) will exceed £10bn for the first time during 2010."
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