U.K. market resilient during COVID pandemic, growing number of smaller pension buy-in, buy-out transactions highlight emerging trend
NEWARK, N.J., July 9, 2020 — Prudential Retirement, a business unit of Prudential Financial, Inc. (NYSE: PRU), has successfully closed $1.7 billion in new longevity reinsurance transactions during the first half of the year, attributing success to pivoting quickly to virtual closings during the COVID-19 global pandemic and a vibrant smaller end of the U.K. pension buy-in and buy-out market.
“While we are now in the midst of incredible uncertainty with the coronavirus, such uncertain times have strengthened our conviction that pension de-risking is an all-weather solution for our institutional client base. ”
“Innovation comes in many forms and this spring, we found ourselves quickly adapting to an entirely virtual environment,” said Rohit Mathur, vice president and head of International Transactions for Prudential Retirement. “While we are now in the midst of incredible uncertainty with the coronavirus, such uncertain times have strengthened our conviction that pension de-risking is an all-weather solution for our institutional client base. For those pension schemes that had de-risked their asset portfolio and that were ready to transact before COVID, there was nothing holding them back from moving forward with their deals.”
Overall, the U.K. market has remained resilient during the ongoing COVID-19 pandemic.
“Volatile markets often bring opportunity, so it pays to be prepared,” Mathur said.
Mathur sees a robust pipeline in the U.K. for the second half of 2020 and the longevity reinsurance market ending the year strong.
“The market is functioning very smoothly, and the smaller end of the market has been quite active,” said Tom Cahill, vice president, longevity reinsurance, Prudential Retirement. “We are proud to have reinsured the risk of many individual schemes in the first half of 2020, including one stand-alone mid-sized transaction and well over a dozen smaller schemes through our flow reinsurance offerings. We are especially proud to be supporting a new insurer on our innovative flow reinsurance platform.”
For those pension schemes looking to transact, it’s important to continue prudent risk management actions with low risk, low volatility investment portfolios, and to set a realistic price target while monitoring funded status and transaction pricing. To learn more about why it makes sense to transact during the pandemic, read Prudential Retirement’s thought leadership paper, “Staying the Course Toward a Lower-risk Future Presents Opportunities For Pension Funds During Times of Market Volatility.”
About Prudential Retirement
Prudential Retirement delivers retirement plan solutions for public, private, and nonprofit organizations. Services include defined contribution, defined benefit and nonqualified deferred compensation record keeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services.
With more than 85 years of retirement experience, Prudential Retirement helps meet the needs of 4.6 million participants and annuitants. Prudential Retirement has $465.8 billion in retirement account values as of March 31, 2020. Retirement products and services are provided by The Prudential Insurance Company of America (PICA), Newark, N.J., or its affiliates.
About Prudential Financial, Inc.
Prudential Financial, Inc. (NYSE: PRU), a financial wellness leader and premier active global investment manager with more than $1 trillion in assets under management as of March 31, 2020, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees help to make lives better by creating financial opportunity for more people. Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit news.prudential.com.