Captive insurance companies are providing pension funds with a
valuable avenue to the reinsurance market for transferring
longevity risk, a newly-published white paper has reported.
'Longevity risk market comes of age', the Guernsey
Finance white paper, written by insurance journalist Helen Yates,
examined how longevity risk - the risk that people live longer into
their retirement - has become a growing burden, particularly for
closed defined benefit schemes or final salary schemes.
Finding solutions to pension longevity risk has become an area
of high growth for Guernsey's financial services sector ever
since the British Telecom Pension Scheme (BTPS) entered into a
£16 billion transaction to transfer a quarter of its
longevity risk to Prudential Insurance Company of America in July
2014. In order to transfer the risk to Prudential, BT established
its own captive insurer, a Guernsey-based incorporated cell company
(ICC), allowing it to access the reinsurance
