Aviva offloads pension fund longevity risk in record deal

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Aviva offloads pension fund longevity risk in record deal

By Jemima Kelly LONDON (Reuters) - British insurer Aviva has agreed to transfer the risk of members of its staff pension scheme living longer than expected to three reinsurers for 5 billion poundsin the largest deal of its kind. Aviva's transaction by itself represents more than half of the total 8.9 billion pounds of longevity swaps in 2013 and is substantially larger than the previous 3.2 billion pound record set by BAE Systems last year. Longevity swaps, which involve a final-salary pension scheme hiving off the risk that it will have to pay pensioners for longer than expected, have become a growing market because statisticians have consistently underestimated life expectancy. Aviva told Reuters on Thursday that the deal was agreed with Swiss Re, Munich Re and SCOR.

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