The trustee of the £1 billion Merchant Navy Ratings Pension Fund has reached an agreement with the Metropolitan Life Insurance Company to manage longevity risk in relation to around £450 million of pensioner and dependant liabilities.
The arrangement provides long-term protection to MNRPF against costs resulting from pensioners or their dependants living longer than expected and enhances security for MNRPF members.
This longevity insurance will form part of MNRPF’s investment portfolio. The transaction is structured as an insurance contract with a captive insurer in Guernsey and onwards reinsurance to MetLife. A captive insurer is an insurance company owned by the those being insured – in this case owned by MNRPF’s Trustee.
WTW acted as lead adviser to the Trustee, with Linklaters as legal adviser and Carey Olsen providing additional advice to the Trustee. Eversheds Sutherland provided legal advice to MetLife
Melanie Cusack, Trustee, MNRPF, said: “I am delighted that the Trustee has taken an important step to ensure that our members’ benefits are strongly secured against increases in life expectancy. This is a continuation of our de-risking journey, and we are pleased to have completed the deal with attractive economics. This is a positive step in providing both additional security for members’ pensions and certainty for employers.”
The trustee was also advised by Carey Olsen in Guernsey. The Trustee’s captive is managed by WTW Guernsey.
