OREANDA-NEWS. The Prudential Insurance Company of America (PICA) a Prudential Financial, Inc. company, and Scottish Widows Limited, a subsidiary of Lloyds Banking Group plc, agreed to their first-ever longevity reinsurance agreement. PICA has assumed the longevity risk for approximately $1.8 billion (?1.3 billion) of annuity liabilities held by Scottish Widows.

“Prudential is privileged to be chosen by Scottish Widows as it seeks to efficiently manage its longevity risk over the coming decades,” said David Lang, Prudential’s lead negotiator for this transaction. “With our new partnership, Scottish Widows attains more flexibility for managing longevity risk, trusting that, with PICA, it has chosen a strong counterparty with shared values and a long-term commitment to the longevity risk transfer business.”

Michael Downie, the finance director, Annuities and Investment Strategy at Scottish Widows, said: “I am delighted to have completed our first longevity reinsurance transaction with Prudential Financial. Their financial strength and long-term commitment to the market was a key consideration for Scottish Widows when selecting a counterparty. Throughout the negotiations, PICA took the time to understand our needs and actively tailored their offering to meet our requirements.”

Amy Kessler, Prudential’s head of longevity reinsurance, said, “The insurer and reinsurer market continues to expand and evolve, and we expect 2018 to continue recent growth trends as managing risk capital becomes increasingly impactful. We are proud that Scottish Widows has chosen to use Prudential’s innovative longevity risk transfer solutions and benefit from our ability to keep up with surging demand from the U.K. and globally. We look forward to building on this important new relationship in the years to come.”

Prudential is a global leader in the pension reinsurance market, with more than $45 billion in international reinsurance transactions since 2011, including the largest longevity risk transfer transaction on record, a $27.7 billion transaction involving the BT Pension Scheme. Prudential was named “Reinsurer of the Year” in 2017 by Risk.net for the fourth year in a row.