Barlow Lyde & Gilbert LLP (“BLG”) has advised Abbey Life Assurance Company Limited (“Abbey Life”), a wholly-owned subsidiary of Deutsche Bank, on a longevity transaction to provide the BMW (UK) Operations Pension Scheme with a hedge for life expectancy associated with nearly £3 billion of pensions scheme liabilities related to c.60,000 pensioners. As part of the transaction, a large proportion of the risk assumed by Abbey Life was syndicated into the reinsurance market to Hannover Re, Partner Re and Pacific Life Re. This longevity hedge represents the largest transaction of its kind to date in the United Kingdom and, in effect, doubles the size of the market overnight.

James Parker, Head of Life, Annuity and Pensions Transactions at BLG, commented: "BLG were delighted once again to advise Abbey Life on a ground-breaking transaction*. Longevity-only solutions are becoming increasingly popular risk mitigation tools in the defined benefit space as trustees look to reduce the cost and volatility of their schemes, and this transaction puts Abbey Life at the forefront of this market. The complexity and scale of this transaction allowed us to bring to bear our substantial expertise in insurance, reinsurance and collateralised security structures.”

BLG CEO David Jabbari said: “This is great example of the complex transactional insurance work we do. In these volatile times, we provide our clients with innovative solutions to help them manage and mitigate risks.” 

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Notes to editors:

Longevity hedging

1. There is a growing market for longevity hedging in the defined benefit pensions market, whereby pension schemes hedge the longevity risk associated with their in-payment pensioners by passing this risk to specialist insurers.

2. Barlow Lyde & Gilbert LLP

BLG is a pre-eminent international law firm with an unrivalled reputation in the financial services and professional practices sectors, and has particular expertise in the insurance, reinsurance and international risk markets. The firm has over 80 partners and more than 300 lawyers in our offices in London, Manchester, Oxford, Shanghai and Singapore together with our affiliated undertakings in Hong Kong and São Paulo.

BLG has a dedicated team focussed on transactions in the life, annuities and pensions markets, headed by partner, James Parker. The team acts for insurers, reinsurers, investment banks and pension buy-out providers, and has particular expertise in collateralised (re)insurance and risk transfer solutions. The BLG team for the Abbey Life transaction was led by partners James Parker and Mike Munro and also included partners Mark Howard and Timothy Parsons, consultant Richard Ham, and associates Kirsty MacLean, Laura Shepperson, Lisa Brown and Katy Breslin.

*In December 2008, BLG advised Abbey Life on a longevity only reinsurance transaction in relation to its portfolio of in-payment annuities with underlying liabilities of £1.5 billion.