Bulk Annuity Services. Working with Willis Towers Watson
|
|
- Brittney Taylor
- 5 years ago
- Views:
Transcription
1 Bulk Annuity Services Working Managing with Willis Towers Longevity Watson Risk Working with Willis Towers Watson
2 Managing longevity risk is becoming increasingly important and the market is evolving rapidly. Willis Towers Watson has driven innovation in this area and helped schemes to integrate longevity risk into their risk management plans. Size and volume We have advised on: De-risking transactions covering over 80% of the liabilities hedged in 2015 Half of all the partial buyout cases completed to date Over 50% of all longevity swaps ever transacted Innovation Our Longevity Direct offering is the first ready-made vehicle for pension schemes to access the longevity reinsurance market 135 pension schemes and six insurers/reinsurers use Willis Towers Watson s market leading postcode mortality tool The only consultancy to have advised on the full range of longevity hedging structures Client-focussed solutions Longevity risk is integrated within investment risk framework to enable active decisions Streamlined approach for longevity swaps and bulk annuities results in quicker, more efficient transactions AWARDS 2014 Deal of the year
3 Foreword There are 2 trillion of UK defined benefit (DB) liabilities only 150bn of these have hedged longevity risk so far. This is an area that continues to grow rapidly both in terms of the size and volume of annuity transactions and longevity swaps, with more innovative ways to access this market being developed. Increasingly, DB pension schemes are on a de-risking journey, ultimately leading to buy-in or self-sufficiency. While investment risk is measured closely and actively managed, less attention has typically been paid to longevity risk. However, as investment risk reduces over time, managing longevity risk becomes increasingly important. With most schemes wishing to remove longevity risk eventually, it is important that trustees and sponsors consider when and how to manage this risk. In the pages that follow, we explore how trustees and sponsors can understand and analyse the longevity risks they face and how stochastic modelling can help you to assess the potential impact of future improvements in mortality. Placing longevity risk in a similar framework to investment and other risks enables this important risk to be monitored and managed in a consistent manner. We also discuss with Ian Aley, our Head of Transactions, the solutions that are available if hedging longevity risk is attractive, how this market is evolving rapidly and why there may be an advantage in acting now. Finally, we share a case study that explains how one of our clients understood their longevity risk and implemented a new and innovative solution to hedge that risk. At Willis Towers Watson, we have driven innovation in this area with unrivalled experience in managing longevity risk and implementing longevity risk solutions. Our team brings together a wide range of backgrounds including insurance, investment, pension consulting, and project management, as well as experience working for insurers and investment banks. We work with a wide range of clients, helping them to identify and manage their longevity risk from the smaller to the largest pension schemes, developing tailored solutions for them. We would welcome the opportunity to discuss with you the changes that are taking place in this increasingly important area, and to work with you to develop a plan that is appropriate for your scheme. Keith Ashton Head of Risk Solutions keith.ashton@willistowerswatson.com 1 Managing Longevity Risk
4 Understanding longevity risk Why is longevity risk important? It will be news to no one that over the last decade the average person s life expectancy has grown. What may be a surprise though is just how great the impact of that change has been on DB pensions: an increase of about 10% to Emma Palfreyman pension scheme liabilities in the last decade alone. That means that if there had been no life expectancy improvements over the last decade, the total FTSE 350 pension deficit would be zero rather than the multiple tens of billions of pounds we see today. So that s all in the past. We are where we are and if you have adjusted your scheme s longevity assumptions, then you re sorted, right? Well, for now, perhaps. At the current rate of improvement it is projected that the life expectancy for a 65 year old will increase by around two years over the next 20 years. But what if, as in the past, this estimate is wrong? Every additional year of life expectancy for the scheme membership adds 3% to the liabilities. What is longevity risk? Before considering how to remove or reduce longevity risk, it is important to understand what it is. There are three aspects to longevity risk, the first of which is called trend risk. Figure 1 shows how the probability of surviving to old age has changed over the years for men. While not much changed between 1850 and 1900, over the next 50 years, the statistic had improved to the point where 90% reached their 40th birthday. Trend risk is the risk that even with all the information available to us at a point in time, we just get it wrong you can see how far an actuary in 1900 or 1850 might have got it wrong! As we move on another 50 years and then finally to 2010, we see further improvements. But interestingly, we are not seeing much change in the ultimate age the human body seems to have a shelf life that we have not been able to extend although there is much debate on this very issue. Even with the lower rate of improvements, there is still scope for us to get it wrong, which can be financially costly. Figure 1. Trend risk Number of survivors (%) Age 2 willistowerswatson.com
5 The second aspect of longevity risk is called idiosyncratic risk. This is the risk that even if mortality rates now and in future were known with certainty, particular individuals or groups live longer than expected. In larger schemes, averaging tends to remove this risk, although even then some schemes could have significant idiosyncratic risk for certain groups, such as highly paid pensioners. How long are your members living now? Using your scheme s own experience is the most powerful approach for setting life expectancy assumptions today, although this is not an option for smaller schemes, which do not have sufficient data. However, by analysing your membership s postcodes and pension amounts using Willis Towers Watson s Postcode Mortality Tool (see Figure 2), we can link the characteristics of a scheme membership with a much larger experience set. This approach has improved the credibility of assumptions being made significantly. But of course, it s only an assumption and it could be wrong this is known as basis risk. How certain can we be about predicting future trends? Once the Scheme Actuary has carried out statistical analysis, decided on a mortality table to fit the observed experience and derived a future longevity assumption, the question to consider is how wrong this assumption might be and the potential financial implications. Stochastic modelling can help to illustrate the potential variability of results. There are a number of different models that can be used to assess longevity risk based on past experience and looking forward using disease-based mortality. As we run simulations using these different models, a range of possible cashflows are produced. This enables us to use the type of terminology typically used when assessing investment risk, such as 1 in 20 scenarios and confidence levels. Once this is done, we can then consider moving longevity risk into the de-risking framework alongside investment risks. Shelly will explore this aspect further on the next two pages. How might this change in the future? As we have seen, it is difficult to predict how fast future improvements might be. Using past trends can only give part of the picture and may result in building in improvements that are unlikely to be repeated. It is important to consider other models, in particular those that investigate developments in disease treatment and prevention that may drive longevity improvements in the future. Figure 2. Postcode Mortality Tool Key: Life expectancy at age years 20 years 18 years 3 Managing Longevity Risk
6 Managing longevity risk Over the last few years, trustees and sponsors have established a journey plan setting out how they expect their scheme to move towards a long-term objective of self-sufficiency or ultimate settlement of the liabilities. Trustees and sponsors will aim to reduce risk along this journey as a scheme matures and funding improves. Shelly Beard The temptation is to reduce the risks that are most familiar and readily modelled: asset risk (largely equities and credit) and on the liability side, interest rate and inflation risk. To date many schemes have yet to quantify the scale of their longevity risk, consider how it compares with other risks and develop a plan for managing it over time. Holistic risk assessment and management becomes increasingly important as a scheme reduces investment risk, otherwise longevity will quickly become the most dominant risk. And there is no need to wait until you are fully funded against technical provisions or fully de-risked elsewhere; indeed this may be too late. We believe schemes are likely to be much more successful in reaching their long-term objectives if they take a balance of well diversified and rewarded risks, rather than leaving a large concentrated exposure to members living longer than expected to be managed at the end. Figure 3. Ranking your key risks 0% 1% 2% 3% 4% 5% Fall in nominal yields Reduction in funding level (1 in 20 shock) Fall in real yields Fall in equity values Fall in credit values Longevity shock To date many schemes have yet to quantify the scale of their longevity risk, consider how it compares with other risks and develop a plan for managing it over time. 4 willistowerswatson.com
7 Figure 3 shows the impact of a longevity shock on a typical scheme s funding level in other words, the impact of an event occurring that has a 1 in 20 chance of happening. In this case, such an event would result in an immediate reduction in the scheme s funding level of more than 2.5%. So if we know most schemes will hedge longevity risk at some point over their journey plan, the key question becomes when is the right time to hedge this risk? Trustees and sponsors should ensure they are measuring and monitoring longevity risk along the way so they do not look back and say if only. For many schemes hedging some longevity risk now will make sense. The first step is to quantify the risk to understand the current position, but, more importantly to understand how the risk evolves over time, using the techniques and tools set out in Understanding longevity risk on pages 4 and 5. Once the size of the longevity risk is known and understood, it can be incorporated into the risk return framework that the scheme uses to assess investment options. This is a lightbulb moment for many, as for the first time the scheme is taking an active decision about how much longevity risk they wish to run, much in the same way as they would with, say, equity risk. It s also possible to extend this analysis to consider, for a given funding level and balance of investment risks, what the optimal proportion of longevity risk is to hedge. For the schemes we ve looked at this analysis for, there is typically a strong theoretical case for hedging between 30% to 50% of the risk and this conclusion is relatively insensitive to the assumptions used. As with any analysis, you can construct reasons why you might not want to hedge what the theory says is an optimal position, but it does allow you to form a view as to an optimal longevity hedge ratio for you, today (given all the other factors) and in the future. And it is probably not zero! This has enabled, where appropriate, clients to successfully implement longevity hedging solutions leading to more efficient investment portfolios, with a higher expected return per unit of risk. Figure 4 below shows examples of the solutions that are available in this evolving market. We consider this market in more detail in the following pages. Figure 4. Examples of market solutions Transfer asset and longevity risk Transfer longevity risk Medical underwriting Top slicing Traditional intermediary Bulk annuities Longevity swaps All-risks Partial buyout Scheme owned cell Direct to reinsurer 5 Managing Longevity Risk
8 Q&A Interview with Ian Aley Ian Aley Head of Transactions Over the last couple of years, there has been a lot of activity and discussion about addressing longevity risk. When should a scheme choose a longevity swap over a bulk annuity? For smaller schemes, a bulk annuity has proved to be the most appropriate option, although recent developments that are discussed below mean that access to the longevity swap route is now available to more schemes. For larger schemes, it typically depends on where the scheme is on its journey plan. Earlier in the journey plan the scheme is likely to need the assets in order to achieve investment returns. Any gilts are often required as collateral for interest rate and inflation swaps. By carrying out a longevity swap, the scheme retains control over most of its assets and this will therefore be a more suitable approach than purchasing annuities, which require assets to be available. The cost of hedging longevity is similar regardless of the chosen approach. Therefore, if a scheme is comfortable with the governance of asset and longevity risks, they could hedge in the same way as a bulk annuity provider would and implement a do-it-yourself solution at a lower cost, as there is no need to pay the insurance risk margin on the asset risks. If schemes want to achieve precision in matching their cash-flows, and value the relatively low governance, then bulk annuities are the way to achieve this, although there will be a cost of doing so. There has been lots of publicity and discussion about longevity swaps recently. What is happening in the bulk annuity market? The bulk annuity market is currently very competitive and we continue to see transactions of all sizes taking place. Following the 2014 budget statement, and the drop off in individual annuities, several insurers are increasingly focusing their attention on the bulk annuity market. This includes those providers who previously only offered medically underwritten buy-ins for pensioners, but are now increasing both the type and size of bulk annuity offered. New entrants to the market are also expected. Combined with this, schemes are increasingly seeing bulk annuities as an investment strategy decision. This is reinforced by the fact that the process for purchasing bulk annuities of all sizes is increasingly standardised and streamlined. For example we led a transaction this year where it took just under four months from first approaching the market to completing the buyout. What is driving the longevity swap market? Why is it so active and will this continue? This is driven by both supply and demand factors. On the demand side, many pension schemes are reaching the point in their journey plan where longevity risk is becoming more significant relative to the other risks they re running. In addition to this, hedging longevity risk has become more affordable see below. On the supply side, many reinsurers have a considerable amount of mortality risk on their books the risk that more people die than expected. By taking on longevity risk which is the opposite they get diversification and can reduce their overall reserve requirements. At the moment, the reinsurers still have much more mortality risk than the 150bn or so of UK longevity risk that has been transferred and they are keen to take on longevity risk, which is reflected in their pricing. However, over the medium to long term, and with 2 trillion of UK DB pension liabilities, this position may change. At a conservative estimate longevity demand might average bn of liabilities a year, which based on our estimates of supply, is likely to cause upward pressure on prices over the medium to long term. 6 willistowerswatson.com
9 What was different about the record-breaking BT deal? Are there going to be more like that? In July 2014, the BT Pension Scheme was the first scheme to access the reinsurance market directly by establishing an insurance cell company owned by the scheme. The structure gave the scheme more direct control over the terms of their longevity insurance and avoided the need to pay an intermediary fee. For schemes that don t wish to go to the effort of creating their own insurance cell company from scratch, there are a small number of organisations who could provide a cell for you. For example, over the course of 2014, WillisTowers Watson developed Longevity Direct to allow our clients to efficiently access the reinsurance market through the purchase of a ready-made insurance cell company, and at the end of the year MNOPF became our first client to successfully complete a deal through this innovative structure. More details on this and the first transaction completed through this model are given on pages 10 and 11. Our view is that this offering will make longevity hedging accessible for more pension schemes. So if I am at the start of the process, what steps should I be taking? Firstly, I d recommend considering what liabilities to hedge for example part or all of your pensioners understanding the level of risk that will be removed and whether a longevity swap or bulk annuity fits best with your journey plan, so that you can decide your preferred strategy. An initial feasibility stage may be appropriate this typically includes indicative market pricing, considering the funding and accounting implications and general training on the options available. At the same time, schemes may wish to complete focused data work. A few small steps to ensure data is fit for purpose can make a significant difference to the price charged: here it is important to focus on the items that really add value. Once these initial steps are completed, the right governance process would need to be put in place for example a sub-committee to take the transaction forward. For larger transactions, a project manager normally adds value for all stakeholders. Then select your potential providers and approach the market. Timescales can be quite short recent buy-in transactions have been completed in a matter of weeks and our most recent longevity swap was finalised in a few months. 7 Managing Longevity Risk
10 Longevity Direct owning your own insurance cell In December 2014, Willis Towers Watson launched Longevity Direct, which enables pension schemes to gain direct access to the reinsurance market in order to hedge longevity risk. Based in Guernsey, Willis Towers Watson Guernsey ICC Limited allows pension schemes to set up a ready-made incorporated cell that can Matt Wiberg write insurance and reinsurance contracts for longevity swap transactions. Longevity Direct is ideally suited to longevity-hedging transactions where a single reinsurer can take on the whole liability. Longevity Direct provides an affordable solution by removing the intermediary fee and its credit exposure fee and replacing these with the lower running costs associated with running a cell. Further benefits to pension schemes of using Longevity Direct would be: Simplified governance process Ability to access a single reinsurer at the best available price Facilitates smaller deals but also makes larger deals with a single reinsurer possible Efficient and cost effective process We find that pension scheme and reinsurer interests are typically reasonably aligned; a direct agreement can be much less complex than the longevity swaps we have seen in the past. This reduction in complexity and therefore the surrounding governance means reduced costs, both at the initial set up stage and throughout the course of the hedge, which should mean hedging is possible for more schemes. Figure 5. How does Longevity Direct work? Beneficiaries TW Guernsey ICC Limited MNOPF Payments based on actual experience Payments based on agreed assumed experience MNOPF IC Limited Payments based on actual experience Payments based on agreed assumed experience Reinsurance market Reinsurer 8 willistowerswatson.com
11 MNOPF managing longevity risk The Trustee of the MNOPF has a journey plan that aims to fund on a low-risk gilts basis. In reviewing the journey plan, alongside Willis Towers Watson, their investment advisers, they identified that the Section had a concentration of longevity risk. Case study Willis Towers Watson undertook a stochastic mortality analysis to establish the size of the risk within the Fund. A de-risking budget was agreed with the trustee, reflecting both the optimal level of longevity risk and anticipated market pricing, which suggested undertaking a 1bn longevity hedge. The trustee approached the market, looking to transact via an insurance cell structure using Willis Towers Watson s Longevity Direct offering, which enabled them to transact directly with the reinsurance market. See Figure 5. Willis Towers Watson undertook a competitive quotation process, extracting price tension to achieve better terms. Due to the attractiveness of the pricing received the trustee was able to increase the size of the transaction to 1.5bn with Pacific Life Re, covering all of the pensioners and dependants in the Fund, some 16,000 members. The Fund set up an incorporated cell, MNOPF IC Limited and entered into the longevity swap in December Longevity Direct led to a simplified process the direct negotiations with the reinsurance market meant that the transaction was completed in less than three months from entering exclusivity. Using this structure has saved MNOPF several millions of pounds in the cost of the hedging. The Fund has now hedged a significant proportion of longevity risk whilst maintaining flexibility over its assets and can continue on its journey plan. Longevity was a significant, concentrated risk for the MNOPF and, having considered the different options available, the Trustee Board decided that Willis Towers Watson s Longevity Direct structure was the most cost effective and efficient structure. Ensign Pensions & MNOPF Chief Executive, Andy Waring 9 Managing Longevity Risk
12 Should you hedge now or later? After reading this document you may be asking whether you should hedge or not? The question is really whether you should hedge your longevity now or later. We would advocate making a conscious decision about hedging as you would with your investment risks rather than being caught out by longevity risk later. To help you decide which of these courses of action is right for you now, please read through the two sets of belief statements below and decide which best describe your current situation. Considering longevity hedging is consistent with: Longevity risk will be hedged eventually Longevity hedging will become more expensive over time or an absence of a view around future pricing Longevity risk is a significant risk now and there are immediate risk management benefits Longevity risk will become material over time and it is sensible to start building a hedge now There may be wider benefits (for example, sponsor and investors may see this as good risk management) Longevity risk represents a single concentrated risk which is only there due to the liabilities of the scheme (you would not choose to add this to a portfolio if it was not there already) The risk saving is worth the governance and associated costs. Deferring longevity hedging is consistent with: The scheme will not hedge longevity risk for many decades Longevity risk will become cheaper to insure in the future Longevity risk is not a significant risk now or the cost of hedging is disproportionate to the risk The scheme does not anticipate de-risking so longevity hedging can be deferred There are other reasons not to hedge (for example, sponsor views and impact on accounts) The governance and implementation costs are too high to justify starting now. 10 willistowerswatson.com
13 Why work with Willis Towers Watson? Willis Towers Watson has considerable experience in working with a wide range of clients in analysing, managing and monitoring longevity risk. Here s why we are best placed to work with you in developing and implementing longevity risk solutions: Unrivalled experience Whether you are interested in understanding your longevity risk better, would like to include longevity risk within your risk framework or would like to implement a longevity swap or carry out a buy-in, our experience is second to none in the market. Strategic advice We take a holistic, integrated approach to advice and implementation, bringing together experts in longevity, transactions, investment, retirement, risk, insurance and project management. Innovation Willis Towers Watson is at the forefront of developments in this area driving innovation from transacting the first collateralised buy-in, first synthetic buy-in and the first longevity swap. Most recently we ve developed Longevity Direct to allow our clients to efficiently hedge longevity risk, and led the advice to the BT Pension Scheme on setting up their insurance company for the purpose of hedging longevity risk. Strong relationships with providers The longevity hedging market is continually evolving, with additional providers entering the market and new products emerging. Keeping close to providers is essential to understand what is available and where they might be appropriate. Willis Towers Watson has built up strong relationships with all the insurers, banks and reinsurers to help navigate the best solution for trustees and sponsors. Flexible and adaptable We will work with you to help you understand how longevity risk is relevant to your particular circumstances and develop a tailored solution. Whether the solution is a longevity swap, a partial buy-in or simply monitoring the position, the recommendation will be relevant to you. 11 Managing Longevity Risk
14 Further information To find out how you can benefit from using Willis Towers Watson s longevity solutions, please contact your Willis Towers Watson consultant, or Ian Aley ian.aley@willistowerswatson.com Keith Ashton keith.ashton@willistowerswatson.com 12 willistowerswatson.com
15
16 About Willis Towers Watson Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 39,000 employees in more than 120 countries. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com. Willis Towers Watson 71 High Holborn London WC1V 6TP Towers Watson is represented in the UK by Towers Watson Limited. The information in this publication is of general interest and guidance. Action should not be taken on the basis of any article without seeking specific advice. To unsubscribe, eu.unsubscribe@towerswatson.com with the publication name as the subject and include your name, title and company address. Copyright 2016 Towers Watson. All rights reserved. WTW-EU-16-PUB-1853 willistowerswatson.com
Managing longevity risk
Managing longevity risk Working with Towers Watson AWARDS 2014 Deal of the year Managing longevity risk is becoming increasingly important and the market is evolving rapidly. Towers Watson has driven innovation
More informationBulk Annuity Services. Working with Willis Towers Watson
Bulk Annuity Services Working Bulk with Annuity Willis Towers Services Watson Working with Willis Towers Watson It s a busy market and Willis Towers Watson has been at the forefront, driving innovation
More informationDe-risking report The evolving bulk annuity and longevity swap markets
De-risking report 2015 The evolving bulk annuity and longevity swap markets De-risking report 2015 The evolving bulk annuity and longevity swap markets AWARDS 2014 Deal of the year Contents Introduction
More informationMind the gap: risk appetite revisited. Risk Series Paper 4
Mind the gap: risk appetite revisited Risk Series Paper 4 Mind the gap: risk appetite revisited Risk appetite frameworks that are linked to a firm s vision, strategy and operations provide a more solid
More informationLONGEVITY RISK The first transactions were completed by Babcock International BILLION TRANSACTION LONGEVITY RISK MARKET COMES OF AGE
LONGEVITY RISK LONGEVITY RISK MARKET COMES OF AGE Longevity risk, the chance that people will live longer than expected, is now increasingly at the forefront of employers minds. As a result, there is now
More informationBy Dion Heijnen Head of Valuation & Financial Reporting, Hong Kong & Taiwan, Insurance Consulting & Technology
Insights March 2018 IFRS 17 does not spare anyone By Dion Heijnen Head of Valuation & Financial Reporting, Hong Kong & Taiwan, Insurance Consulting & Technology Introduction On 18 May 2017, the International
More informationIgloo Standard Formula. Simplifying the SCR Solvency II calculation
Igloo Standard Formula Simplifying the SCR Solvency II calculation Approximately 60% of the UK market (by premium income, and excluding Lloyd s) use Igloo to support their Solvency II requirements. 9 of
More informationFTSE 350 DC Pension Scheme Survey The journey so far and new directions of travel
FTSE 350 DC Pension Scheme Survey The journey so far and new directions of travel FTSE 350 DC Pension Scheme Survey The journey so far and new directions of travel Table of contents Foreword... 1 Executive
More informationEnsuring a smooth de-risking journey
Ensuring a smooth de-risking journey De-risking report 2018 Ensuring a smooth de-risking journey De-risking report 2018 Contents Looking back at 2017...4 Getting the best value in the bulk annuity market...6
More informationDefined benefit pension schemes. The impact on FTSE350 company accounts at 31 December 2011
Defined benefit pension schemes The impact on FTSE350 company accounts at 31 December 2011 June 2012 Defined benefit pension schemes The impact on FTSE350 company accounts at 31 December 2011 Contents
More informationLiability hedging. de-risking and de-stressing
Liability hedging de-risking and de-stressing Introduction Pension funds do not need to be told that they currently face a multitude of challenges and risks. We believe liability hedging (also known as
More informationUK Risk Settlement. Understanding and Managing Pension Risks. Risk Settlement Group Quarterly Update, January 2012
UK Risk Settlement Understanding and Managing Pension Risks Risk Settlement Group Quarterly Update, uary 2012 ket news Despite another rollercoaster year and difficult conditions in many investment markets,
More informationLiability management. Reducing scheme risk through increased member options
Liability management Reducing scheme risk through increased member options 2 towerswatson.com Liability management - reducing scheme risk through increased member options There are several options available
More informationHolistic Equity Portfolio. FOMO (/ˈfəʊməʊ an exciting or interesting event may currently
Portfolio Matters Holistic Equity Portfolio FOMO (/ˈfəʊməʊ an exciting or interesting event may currently equity investor, should you be experiencing a sense of FOMO? What exactly could you be missing
More informationThe five biggest DB pensions challenges today
Aon Hewitt Retirement and Investment The five biggest DB pensions challenges today and how to solve them Enter What are the biggest challenges facing UK Defined Benefit (DB) schemes today? The DB pensions
More informationInsights. Turkish Insurance Bulletin
Insights December Turkish Insurance Bulletin Our Turkish Insurance Bulletin keeps senior executives around the world up-to-date with the developments in the Turkish insurance market a market that remains
More informationCover title 26/29 Risk appetite gains momentum 45 light white in a changing world
Cover title 26/29 Risk appetite gains momentum 45 light white in a changing world Cover subtitle 12/15 65 medium black 2017/2018 Global Reinsurance and Risk Appetite Survey Report How is risk appetite
More informationThe need to look deeper on the gender gap
The need to look deeper on the gender gap The gender gap in retirement savings is not just about superannuation balances; a deeper analysis could help policymakers target those most in need, says Jackie
More informationImproving your customer s experience through Streamlined Underwriting
Improving your customer s experience through Streamlined Underwriting An emerging idea for the Colombian market Marcela Abraham May 9, 2017 2017 Willis Towers Watson. All rights reserved. Agenda Introduction
More informationBUYOUT MARKET WATCH REPORT
2015 ANNUAL BUYOUT MARKET WATCH REPORT From JLT Employee Benefits for the year ended 31 December 2014 JLT EMPLOYEE BENEFITS 2 2015 ANNUAL BUYOUT MARKET WATCH REPORT FOREWORD Duncan Howorth CEO JLT EMPLOYEE
More informationIFRS 17 technology solutions the CSM calculation
IFRS 17 technology solutions the CSM calculation IFRS 17 and the Contractual Service Margin This briefing document focuses on how to incorporate the Contractual Service Margin (CSM) calculations required
More information2018 Global Survey of Accounting Assumptions. for Defined Benefit Plans. Executive summary
2018 Global Survey of Accounting Assumptions for Defined Benefit Plans Executive summary Executive summary In broad terms, accounting standards aim to enable employers to approximate the cost of an employee
More informationAdvanced analytics and the future: Insurers boldly explore new frontiers. 2017/2018 P&C Insurance Advanced Analytics Survey Results Summary (Canada)
Advanced analytics and the future: Insurers boldly explore new frontiers 2017/2018 P&C Insurance Advanced Analytics Survey Results Summary (Canada) Introduction: Insurers boldly explore new analytics frontiers
More informationPension scheme consolidation
Briefing Pension scheme consolidation An alternative to traditional exit strategies? RISK PENSIONS INVESTMENT INSURANCE Traditionally, there have been two main pension scheme exit strategies: 1. Prudent
More informationWorking with Willis Towers Watson. members of defined benefit schemes. A survey of members choices so far
Bulk A year Annuity of pension Services flexibility for Working with Willis Towers Watson members of defined benefit schemes A survey of members choices so far Foreword It is now a year since what the
More informationLiability Aware Investing
For Investment Professionals Liability Aware Investing Objective-driven investing: evolving the DB mindset Anna Troup is Head of UK Bespoke Solutions at LGIM where she is responsible for finding ways of
More informationUK Risk Settlement. Pricing Opportunity Continues
Aon Hewitt Retirement & Investment UK Risk Settlement Pricing Opportunity Continues As the graph below shows, annuities are continuing to deliver notably better yields than comparable low-risk assets for
More informationNov 2009 Royal Berkshire Swiss Re 1bn Pensioner bespoke longevity swap
UK Risk Settlement Understanding and Managing Pension Risks Risk Settlement Group Quarterly Update, July 2013 Market news After an uneven 2012, several key transactions completed in Q1 of 2013, giving
More informationFunding DB pension schemes: Getting the numbers right
Aon Hewitt Consulting Retirement & Investment Funding DB pension schemes: Risk. Reinsurance. Human Resources. Funding DB pension schemes: Executive summary There is considerable debate in the UK pensions
More informationTime to Focus on Getting Things Done. Delivering Pensions Stability faster. Risk. Reinsurance. Human Resources.
Aon Hewitt Retirement and Investment Solutions Time to Focus on Getting Things Done Delivering Pensions Stability faster Risk. Reinsurance. Human Resources. Time to focus on getting things done Delivering
More informationUnlocking Value From Effective Retirement Plan Governance. The 2016 Willis Towers Watson U.S. Retirement Plan Governance Survey
Unlocking Value From Effective Retirement Plan Governance The 2016 Willis Towers Watson U.S. Retirement Plan Governance Survey Organizations with effective retirement plan governance are better equipped
More informationDefined Benefit Pension Solutions Liability aware solutions offering growth, cashflow and risk management
Intended for pension fund trustees and their investment consultants only. Not to be distributed to pension scheme members. Defined Benefit Pension Solutions Liability aware solutions offering growth, cashflow
More informationChoosing the right actuarial valuation approach
Aon Retirement and Investment Choosing the right actuarial valuation approach October 2018 Table of contents Introduction...3 What is the purpose of an actuarial valuation?...4 Long-term objectives....5
More informationUK Risk Settlement. Phoenix Group optimise their de-risking strategy with 1.2bn buy-in following a longevity swap
UK Risk Settlement May 2017 Headlines Phoenix Group optimise their de-risking strategy with 1.2bn buy-in following a longevity swap Longevity swap to bulk annuity is a viable de-risking approach Pension
More informationWorking late. Managing the wave of U.S. retirement. Results from the 2018 U.S. Longer Working Careers Research
Working late Managing the wave of U.S. retirement Results from the 2018 U.S. Longer Working Careers Research Older workers: an asset and an unknown Older workers can be some of employers most important
More informationBulk Annuity Annual Report Overview of the current bulk annuity market and recent developments RISK PENSIONS INVESTMENT INSURANCE
RISK PENSIONS INVESTMENT INSURANCE 2017 Bulk Annuity Annual Report 2017 Overview of the current bulk annuity market and recent developments Bulk Annuity Annual Report 2017 1 2 Bulk Annuity Annual Report
More informationJLT EMPLOYEE BENEFITS. Buy-inSure The solution to your 5m 60m pensioner buy-in transactions
JLT EMPLOYEE BENEFITS Buy-inSure The solution to your 5m 60m pensioner buy-in transactions Pedigree The successful completion of a buy-in transaction is built on a foundation of robust processes, strong
More informationModelling the case for a new public Superfund as a consolidation vehicle to address legacy defined benefit scheme risks
Modelling the case for a new public Superfund as a consolidation vehicle to address legacy defined benefit scheme risks This Paper was commissioned by the PLSA from Simon Willes, Chairman, Gazelle Corporate
More informationDevelopments in Longevity Swaps
Developments in Longevity Swaps Andrew Murphy Pacific Life Re Risk transfer market the first 10 years (Source: Hymans) 2 Longevity transaction structures and developments Captive Small schemes Intermediated
More informationBBC Pension Scheme. Actuarial valuation as at 1 April June willistowerswatson.com
BBC Pension Scheme Actuarial valuation as at 1 April 2016 30 June 2017 willistowerswatson.com 1 Summary The main results of the Scheme s actuarial valuation are as follows: Technical provisions funding
More informationHibernation versus termination
PRACTICE NOTE Hibernation versus termination Evaluating the choice for a frozen pension plan James Gannon, EA, FSA, CFA, Director, Asset Allocation and Risk Management ISSUE: As a frozen corporate defined
More informationAon Hewitt Retirement and Investment. Aon Investment Research and Insights. Endgame Strategies. Cashflow Driven Investment Series.
Aon Hewitt Retirement and Investment Aon Investment Research and Insights Endgame Strategies Cashflow Driven Investment Series November 2017 Table of contents Executive summary....3 Introduction...4 What
More informationAggressive Growth Balanced Moderate Cash
Super News Towers Watson Superannuation Fund Welcome to the May 2017 newsletter that keeps you up-to-date with the latest news about what s happening in super and your Fund. Changes to investments Over
More informationA Flight Path to Self Sufficiency
A Flight Path to Self Sufficiency Longer term planning for pension schemes Mark Humphreys and Jonathan Smith, Head of UK Strategic Solutions & Strategic Solutions Analyst Introduction In this paper we
More informationBuy-ins, buy-outs and longevity transactions. A guide for trustees 2018
Buy-ins, buy-outs and longevity transactions A guide for trustees 2018 Introduction Welcome to our 2018 guide to buy-ins, buy-outs and longevity solutions. 2017 was another big year for the bulk annuity
More informationInsights. Turkish Insurance Bulletin
Insights June 218 Turkish Insurance Bulletin Willis Towers Watson Turkish Insurance Bulletin aims to keep senior executives around the world up-to-date with the developments in the Turkish insurance industry
More informationCargo Undercover Smart. Tailored. Flexible.
Cargo Undercover Smart. Tailored. Flexible. One policy, one solution Transits Storage Terrorism War on land Political violence Revolution Rebellion Insurrection Smart In today s complex world, where war
More informationArticle from. International News. May 2016 Issue 68
Article from International News May 2016 Issue 68 $270 Billion and Growing: The Rapidly Expanding Pension and Longevity Risk Transfer Market By Amy Kessler and Arnaud Bensoussan Exhibit 2: Comparison of
More informationCashflow Management Strategy
Aon Hewitt Retirement and Investment Aon Investment Research and Insights Cashflow Management Strategy Cashflow Driven Investment Series November 2017 Table of contents Executive summary....3 Introduction...4
More informationWorst M&A performance for a decade is the bubble about to burst? M&A Quarterly Deal Performance Monitor: Q4 2017
Worst M&A performance for a decade is the bubble about to burst? M&A Quarterly Deal Performance Monitor: Q4 2017 Worst M&A performance for a decade is the bubble about to burst? Final quarter of 2017 records
More informationFollowing a record breaking year, 2015 gets off to a steady start.
LCP PENSIONS DE-RISKING QUARTERLY UPDATE Q2 2015 Following a record breaking year, 2015 gets off to a steady start. IN THIS ISSUE Welcome to LCP s review of the latest developments in the buy-in, buy-out
More informationAN INTRODUCTION TO LIABILITY DRIVEN INVESTMENT AN INTRODUCTION TO LIABILITY DRIVEN INVESTMENT HELPING PENSION SCHEMES ACHIEVE THEIR ULTIMATE GOAL
FOR PROFESSIONAL CLIENTS ONLY. NOT TO BE REPRODUCED WITHOUT PRIOR WRITTEN APPROVAL. PLEASE REFER TO ALL RISK DISCLOSURES AT THE BACK OF THIS DOCUMENT. AN INTRODUCTION TO LIABILITY DRIVEN INVESTMENT HELPING
More informationA growing interest in employee financial well-being in India
A growing interest in employee financial well-being in India Insights from the Global Benefits Attitudes Survey 2016 Indian employees satisfaction with their financial state today belies financial worries
More informationILS market interests converge to cultivate growth Global ILS Market Survey Report
ILS market interests converge to cultivate growth 2018 Global ILS Market Survey Report How do (re)insurers, fund managers and investors view the market and where do their interests converge? How will the
More informationOverview of the pension risk transfer market
August 2017 Overview of the pension risk transfer market Celebrating 30 years Our market update for the first half of 2017 details our new business volumes plus market activity and trends. Market overview
More informationUK Risk Settlement. Longevity swap activity expected to increase. Any de-risking strategy should include consideration of bulk annuities
Aon Hewitt Consulting Retirement August 2017 UK Risk Settlement Headlines In this issue Exceptional annuity pricing expected to continue until at least early 2018 Longevity swap activity expected to increase
More informationHEALTH WEALTH CAREER MERCER WEBINAR LONGEVITY RISK ARE YOU READY TO HEDGE? 26 APRIL Alan Baker Andrew Ward Suthan Rajagopalan
HEALTH WEALTH CAREER MERCER WEBINAR LONGEVITY RISK ARE YOU READY TO HEDGE? 26 APRIL 2016 Alan Baker Andrew Ward Suthan Rajagopalan AGENDA 1. BACKGROUND 2. KEY CONSIDERATIONS 3. NEW WAYS TO MANAGE THE RISK
More informationHelping you improve your investment portfolio in challenging markets
Aon Hewitt Retirement and Investment For Professional Clients only Helping you improve your investment portfolio in challenging markets Investment solutions for insurers Over 820 investment professionals
More informationPublic Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. cover_test.indd 1-2 4/24/09 11:55:22
cover_test.indd 1-2 4/24/09 11:55:22 losure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 1 4/24/09 11:58:20 What is an actuary?... 1 Basic actuarial
More information2016 General Industry Salary Budget Survey - Canada
2016 General Industry Salary Budget Survey - Canada Results preview Thank you for participating in the 2016 General Industry Salary Budget Survey - Canada. To express our appreciation, we are providing
More informationJLT EMPLOYEE BENEFITS JLT EMPLOYEE BENEFITS. Buyout Market Watch
JLT EMPLOYEE BENEFITS JLT EMPLOYEE BENEFITS Buyout Market Watch An Update Report from JLT Employee Benefits as at 30 June 2013 JLT Buyout Market Watch Update 30 June 2013 Executive summary After a healthy
More informationNo end to growth in sight
No end to growth in sight The UK LDI Market June 2017 kpmg.com/uk/pensions Executive summary The Liability Driven Investment (LDI) industry continues to grow rapidly, with 908 billion of liabilities hedged
More informationThe UK life insurance market
The UK life insurance market 2017-2018 Evolution, with a capital R The UK life insurance market 2017-2018 Evolution, with a capital R Over the centuries insurers have generally had the luxury of evolving
More informationThe stock throughput solution. Transit and stock in a single policy
The stock throughput solution Transit and stock in a single policy Stock throughput What is it? An All Risks Marine Cargo policy, suited to retailers, manufacturers and traders, which can include: Inland
More informationExplaining Your Financial Results Attribution Analysis and Forecasting Using Replicated Stratified Sampling
Insights October 2012 Financial Modeling Explaining Your Financial Results Attribution Analysis and Forecasting Using Replicated Stratified Sampling Delivering an effective message is only possible when
More informationMerchant Navy Officers Pension Fund (MNOPF) Statement of Investment Principles
Merchant Navy Officers Pension Fund (MNOPF) Statement of Investment Principles Introduction The main purpose of the MNOPF is to provide pensions on retirement at normal pension age for Officers in the
More informationNUI, Maynooth Voluntary Contribution Scheme. Investment Guide
NUI, Maynooth Voluntary Contribution Scheme Investment Guide Date: August 2017 Contents Introduction...2 Fund Choices...4 Lifestyle Investment Strategy option...7 Appendices...9 1 Introduction The purpose
More informationDSV UK GROUP PENSION SCHEME Your Guide to Making Investment Decisions October 2015
DSV UK GROUP PENSION SCHEME Your Guide to Making Investment Decisions October 2015 Issued on behalf of DSV Pension Trustees Limited (Trustee of the DSV UK Group Pension Scheme) DSV UK GROUP PENSION SCHEME
More information2017 CDB Pharmaceutical and Health. Sciences Compensation Surveys - U.S.
17 CDB Pharmaceutical and Health Sciences Compensation Surveys - U.S. Participate and tap into high-quality data to refresh your pay program. When it comes to attracting and retaining talent, pay matters.
More informationThe Balancing Act between Pension Scheme Funding and Rewarding Shareholders
UK The Balancing Act between Pension Scheme Funding and Rewarding Shareholders Volume 2018 Issue 19 11 April 2018 The Pensions Regulator has published its latest annual funding statement for trustees and
More informationPension scheme de-risking a practical guide
Pension scheme de-risking a practical guide Pension scheme de-risking a practical guide Introduction The Aon Hewitt Mid-Market Pension Survey 2012 found that over 80% of UK pension schemes with assets
More informationTHE INSURANCE BUSINESS (SOLVENCY) RULES 2015
THE INSURANCE BUSINESS (SOLVENCY) RULES 2015 Table of Contents Part 1 Introduction... 2 Part 2 Capital Adequacy... 4 Part 3 MCR... 7 Part 4 PCR... 10 Part 5 - Internal Model... 23 Part 6 Valuation... 34
More informationProcess. Savings. 11 November 2013
Innovations in DB De-risking; medically underwritten bulk annuities David Harvey, Martin Parker, Partnership Current Highlights in Pensions November 2013 Agenda 1. Enhanced/impaired individual annuity
More informationRoute to settlement Spring 2014
Route to settlement Spring 2014 Route to settlement Contents The right notes in the right order Pensions Age February 2014 4 All-risks buyouts Pensions Age April 2013 6 Medical underwriting Pensions Age
More informationUnderstanding Longevity Risk
Aon Hewitt Risk Settlement Group Understanding Longevity Risk Risk. Reinsurance. Human Resources. Understanding longevity risk Pension schemes are increasingly focusing on understanding and managing longevity
More informationUK Risk Settlement. Market pricing
Aon Hewitt Retirement & Investment UK Risk Settlement Market pricing The annuity market has continued to offer pricing at historically favourable levels of pricing over the autumn, reflecting successful
More informationNational University of Ireland Maynooth Income Continuance Plan. Information Booklet October 2014
National University of Ireland Maynooth Income Continuance Plan Information Booklet October 2014 B Overview of the NUI Maynooth Income Continuance Plan The National University of Ireland Maynooth Income
More informationYOUR pension. investment guide. It s YOUR journey It s YOUR choice. YOUR future YOUR way. November Picture yourself at retirement
YOUR pension YOUR future YOUR way November 2017 YOUR pension investment guide It s YOUR journey It s YOUR choice Picture yourself at retirement Understanding the investment basics Your investment choices
More informationSession 5b2 Annuity Developments in Pension Market. Janet Li, CFA
Session 5b2 Annuity Developments in Pension Market Janet Li, CFA Annuity Developments in Pension Market JANET LI, CFA Executive Committee Member, the Hong Kong Retirement Schemes Association Director,
More informationFCA CONSULTATION PAPER CP14/11 RETIREMENT REFORMS AND THE GUIDANCE GUARANTEE
OUR RESPONSE TO: FCA CONSULTATION PAPER CP14/11 RETIREMENT REFORMS AND THE GUIDANCE GUARANTEE 22 September 2014 0 P A G E ROYAL Introduction The Royal London Group is pleased to respond to this consultation
More informationConsultation: Revised Specifi c TASs Annex 1: TAS 200 Insurance
Consultation Financial Reporting Council May 2016 Consultation: Revised Specifi c TASs Annex 1: TAS 200 Insurance The FRC is responsible for promoting high quality corporate governance and reporting to
More informationCashflow focus: A matter of balance. Cashflow awareness: Transfers out Graham Moles talks about managing transfers out of DB pension schemes p66
Sponsored by Cashflow awareness: Transfers out Graham Moles talks about managing transfers out of DB pension schemes p66 A new king in town Lynn Strongin Dodds reveals how -driven investing is fast becoming
More informationSuccessful investment strategy for pension schemes
RISK PENSIONS INVESTMENT INSURANCE Successful investment strategy for pension schemes A three-step approach 1 Successful investment strategy for pension schemes Pension fund investment is undoubtedly one
More informationWillis Towers Watson Reports Fourth Quarter and Full Year Results
IMPORTANT: Please see Section 9B of our Annual Report on Form 10-K, filed with the SEC on March 1, 2017, for certain updates to our results for the year ended December 31, 2016. Reports Fourth Quarter
More informationShare prices of global acquirers continue to underperform World Index in the third quarter. M&A Quarterly Deal Performance Monitor: Q3 2017
Share prices of global acquirers continue to underperform World Index in the third quarter M&A Quarterly Deal Performance Monitor: Q3 2017 Share prices of global acquirers continue to underperform World
More informationAccessing your DC pension savings
BASF UK Group Pension Scheme ( the Scheme ) Accessing your DC pension savings This leaflet explains the retirement income options available for your defined contribution (DC) pension savings in the Scheme.
More informationInvestments for the Target Benefit Plan
Aon Hewitt Consulting Retirement Investments for the Target Benefit Plan Efficient strategies to empower pension plan sustainability Risk. Reinsurance. Human Resources. I. Introduction Target benefit plans
More informationAon Hewitt Retirement Investment Consulting. Escrow. reconciling stability and surplus. December Risk. Reinsurance. Human Resources.
Aon Hewitt Retirement Investment Consulting Escrow reconciling stability and surplus December 2014 Risk. Reinsurance. Human Resources. Summary Achieving long-term stability within a pension scheme is no
More informationReport on actuarial valuation as at 31 December Church Workers Pension Fund
Report on actuarial valuation as at 31 December 2016 Church Workers Pension Fund 3377205 Page 1 of 32 Church Workers Pension Fund Report on actuarial valuation as at 31 December 2016 As instructed, we
More informationUK Risk Settlement. Annuity yields remain high relative to gilts
Aon Hewitt Retirement & Investment UK Risk Settlement Annuity yields remain high relative to gilts Keen followers of pricing in the annuities market will know that the cost of a buy-in investment has been
More informationFinding value in private debt
Finding value in private debt Adoption of private debt is widespread, but we believe many are failing to exploit the full breadth of the asset class. 2 willistowerswatson.com From a brand new opportunity
More informationCAPTIVE INSURANCE IN ASIA
ATTITUDES TOWARDS CAPTIVE INSURANCE IN ASIA Survey conducted by Captive Review in partnership with Labuan International Business and Financial Centre 1 SURVEY ASIA WHITE PAPER Richard Cutcher Editor, Captive
More informationReal solutions designed to improve participant outcomes.
DEFINED CONTRIBUTION SOLUTIONS Real solutions designed to improve participant outcomes. INVESTED. TOGETHER. Is your DC plan keeping pace with today s DC challenges? DC PLANS ARE CHANGING. Today, many workers
More informationMarch Overview of the pension risk transfer market
March 2017 Overview of the pension risk transfer market Market overview 2016: DEMONSTRATING OUR INDUSTRY S ABILITY TO DELIVER 2016 was a year for the insurance industry to prove itself; from the uncertainty
More informationADVISING ON PENSION TRANSFER RESPONSE TO CP17-16
ADVISING ON PENSION TRANSFER EXECUTIVE SUMMARY EValue welcomes the FCA s Consultation Paper on pension transfers. In the light of the high levels of transfer activity currently taking place and much misunderstanding
More informationDB Dynamics. Setting the liability hedge level. For investment professionals only. Not for distribution to individual investors.
DB Dynamics Setting the liability hedge level For investment professionals only. Not for distribution to individual investors. In this edition of DB Dynamics we present our hedging philosophy, explaining
More informationAge-dependent or target-driven investing?
Age-dependent or target-driven investing? New research identifies the best funding and investment strategies in defined contribution pension plans for rational econs and for human investors When designing
More informationInvestment Insights LDI PLUS
RISK PENSIONS INVESTMENT INSURANCE Newsletter Investment Insights LDI PLUS The use of liability driven investments (LDI), by which we mean the practice of using leverage to try to reduce the exposure of
More informationEconomic Capital. Implementing an Internal Model for. Economic Capital ACTUARIAL SERVICES
Economic Capital Implementing an Internal Model for Economic Capital ACTUARIAL SERVICES ABOUT THIS DOCUMENT THIS IS A WHITE PAPER This document belongs to the white paper series authored by Numerica. It
More informationFiduciary Management. A guide for pension schemes. KPMG Investment Advisory
Fiduciary Management A guide for pension schemes KPMG Investment Advisory 2017 Is Fiduciary Management right for me? Can Fiduciary Management improve my pension scheme? This is a question we often hear
More information