Prudential Insurance Company of America (PICA) has launched a reinsurance counterparty, lending support to insurers that account for more than 90% of the UK pension risk transfer market.
A subsidiary of American financial services firm Prudential Financial, which has more than $1trn in assets under management (AuM), the insurer has partnered with Phoenix Group to provide a longevity reinsurance agreement covering UK retirees.
Following the launch of PICA's longevity reinsurance product in 2011, along with Phoenix and its affiliate Prudential Retirement Insurance and Annuity Company, it now provides reinsurance support to pension insurers accounting for almost all of the annual volume of buy-ins and buyouts in the UK.
Phoenix head of bulk annuities Justin Grainger said: "Phoenix views longevity reinsurance as a key risk management tool. This transaction brings further depth to our reinsurer relationships and enhances our ability to offer competitive terms to pension schemes as we continue to develop our de-risking proposition."
Prudential Financial head of international transactions for longevity risk transfer Rohit Mathur said: "[Prudential Financial] has consistently focused on supporting the entire UK pension de-risking market. The addition of Phoenix is a culmination of our efforts over the past several years to do just that.
"We have invested in our pricing and transaction teams and that is especially important right now as UK pension schemes are racing to get risk transfer deals over the line during the seven-month Brexit delay.
"With so much uncertainty on the horizon, we are happy to be in a position to support the robust pipeline of pension buy-ins and buyouts seeking to be completed while market conditions hold."
As of 30 June, Phoenix had more than £226bn in AuM, including the recently acquired Standard Life Assurance business which Standard Life Aberdeen sold for £3bn in September last year.
PICA was advised in this deal by Willkie Farr & Gallagher, while Phoenix was advised by CMS and Eversheds Sutherland.
This announcement comes after Prudential Retirement revealed in April it had so far this year reinsured $2.6bn of UK pension risk.
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