December 2020

21Dec

UK. Longevity risk transfer nears record. 2021 to be busy again despite pandemic: WTW

The market for longevity swaps and longevity risk transfer has hit forecasted volumes in 2020 despite the implications of the global COVID1-9 pandemic and Willis Towers Watson believes another busy year is ahead in 2021. Read also Personal data leak in one of Britain’s largest pension providers The longevity de-risking market, where pensions transfer their longevity risk to global reinsurance markets, has proven resilient in 2020 and despite the “turmoil” broker Willis Towers Watson (WTW) notes that more than UK...

December 21, 2020
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16Dec

UK. BBC presses play on $4 billion longevity swap

BBC Pension Scheme, London, completed a £3 billion ($4 billion) longevity swap with Zurich and Canada Life Reinsurance. Read also Ireland. A new model for pensions required The deal provides the pension fund and sponsoring employer British Broadcasting Corp. "with more certainty over future funding costs, and improves the security of all members' benefits," a notice posted on the pension fund's website said. Read also UK. Canadian pension fund takes control of Trafford Centre The fund had £17.3 billion in assets...

December 16, 2020
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10Dec

UK. Pension risk transfer market to hit up to £60bn in 2021

The UK pension risk transfer market could reach up to £60bn in 2021 through bulk annuities, longevity swaps and new risk transfer solutions, according to forecasts from Mercer. The firm has predicted continued growth in risk transfers during 2021, stating that increased activity will likely be driven by an increase in demand and innovative and streamlined processes, and could lead to the "busiest year on record". In particular, it predicted that there would be better affordability as more schemes...

December 10, 2020
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03Dec

Reconsidering Risk Aversion

By Daniel J. Benjamin, Mark Alan Fontana, Miles S. Kimball Risk aversion is typically inferred from real or hypothetical choices over risky lotteries, but such “untutored” choices may reflect mistakes rather than preferences. We develop a procedure to disentangle preferences from mistakes: after eliciting untutored choices, we confront participants with their choices that are inconsistent with expected-utility axioms (broken down enough to be self-evident) and allow them to reconsider their choices. We demonstrate this procedure via a survey about...

December 3, 2020
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November 2020

30Nov

Canadian pension funds, insurers seeking private debt face shrinking pool of lower-risk firms

Canadian pension funds and insurers are facing a shrinking universe of higher-quality private debt investments to lift returns in a low-yield world, as the coronavirus pandemic has crushed many businesses, while banks maintain lending to better ones. The tightening supply of this high-yielding credit comes as many Canadian institutional investors have been accelerating their exposure to the private debt. Private credit is issued primarily by closely held companies, offering a premium over corporate bonds due to fewer disclosures and...

November 30, 2020
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27Nov

Longevity Risk and Hedging Solutions

By Guy Coughlan, David P. Blake, Richard D. MacMinn, Andrew J. G. Cairns, Kevin Dowd Longevity risk – the risk of unanticipated increases in life expectancy – has only recently been recognized as a significant global risk that has materially raised the costs of providing pensions and annuities. We first discuss historical trends in the evolution of life expectancy and then analyze the hedging solutions that have been developed for managing longevity risk. One set of solutions has come...

November 27, 2020
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10Nov

Risk Dashboard: European insurers slightly less exposed to risks compared to the beginning of COVID-19 outbreak but concerns remain

Today the European Insurance and Occupational Pensions Authority (EIOPA) published its updated Risk Dashboard based on the second quarter of 2020 Solvency II data. The results show that the risk exposures of the European Union insurance sector slightly reduced, compared to July risk assessment. Insurers are particularly exposed to very high levels of macro risk, while market, credit, profitability and solvency risks decreased to medium level. However, the risk assessment does not account for the outbreak of the second...

November 10, 2020
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04Nov

Milliman expands Pension Buyout Index to include competitive pricing rate, which drops to 100.2% in September

Milliman, Inc., a premier global consulting and actuarial firm, today announced the latest results of its Milliman Pension Buyout Index (MPBI). As the Pension Risk Transfer (PRT) market continues to grow, it has become increasingly important to monitor the annuity market for plan sponsors that are considering transferring retiree pension obligations to an insurer. Read also Retirement Saving Is Hard Even For Those Who Can Afford It While we continue to analyze annuity purchase rates from all insurers, starting this...

November 4, 2020
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03Nov

UK. Pensions risk transfer market resilient against Covid-19

The UK pensions risk transfer market has so far shown remarkable resilience to the economic impact of the Covid-19 pandemic. Although market conditions may mean some schemes will be further away from being able to de-risk than they were before the pandemic, the market remains busy and others will still be in a position to proceed with planned risk transfer activity. We can also expect to see a greater volume of forced transfer activity reaching the market in the...

November 3, 2020
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October 2020

29Oct

Reconsidering Risk Aversion

By Daniel J. Benjamin, Mark Alan Fontana, Miles S. Kimball Risk aversion is typically inferred from real or hypothetical choices over risky lotteries, but such “untutored” choices may reflect mistakes rather than preferences. We develop a procedure to disentangle preferences from mistakes: after eliciting untutored choices, we confront participants with their choices that are inconsistent with expected-utility axioms (broken down enough to be self-evident) and allow them to reconsider their choices. We demonstrate this procedure via a survey about...

October 29, 2020
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