Willkie Advises Prudential in $27 Billion Longevity Risk Transfer Transaction with British Telecom

July 21, 2014

Firm advises The Prudential Insurance Company of America in connection with the largest single longevity transaction on record.

Willkie recently advised The Prudential Insurance Company of America in connection with the largest single longevity transaction on record. The transaction, which closed on July 4, 2014, is the largest single longevity risk transfer deal on record, covering £16 billion ($27 billion), approximately 25% of BT Pension Scheme’s liabilities associated with increases in life expectancy of its beneficiaries. The size of the transaction is almost double the total £8.9 billion of longevity hedging transactions in the total market in 2013.

The transaction utilized a novel pass-through approach under which BT Pension Scheme set up a wholly owned captive insurance company in Guernsey and transferred longevity risk to this insurer. The Prudential Insurance Company of America, in turn, reinsured the longevity risk from BT Pension Scheme’s captive insurer. This structure allowed BT Pension Scheme to access the global reinsurance market without the use of any intermediaries and directly take on Prudential’s counterparty risk.

The Willkie deal team was led by partner Vladimir Nicenko, and included partner Nicholas Bugler, special counsel Cindy Chernuchin and associates Christian Ercole and Timothy Andree. Of counsel Arthur Lynch and associate Robert Larimore advised on tax matters, and Delfino e Associati partner Martin Pugsley advised on English law aspects of the collateral elements of the transaction.