The BA’s Airways Pension Scheme (APS) has established the insurer to underwrite longevity risk, which will protect the scheme against costs associated with potential increases in life expectancy.
APS has transferred longevity risk to the insurer, which in turn has reinsured the longevity risk.
The scheme used a Guernsey-based incorporated cell company to establish the insurer, which provided a cost effective platform for the transaction.
Paul Eaton, business development director of Artex, said: “APS had previous experience with longevity swaps, but after careful analysis determined that for future transactions the use of an insurer would offer significant cost and control advantages. A considerable amount of time was spent planning for this transaction, and a key element of the project involved the consideration of where to establish the insurer.”
Merise Wheatley, director and project leader at Artex for the establishment of the APS insurer, added: “It has been a great experience to work on this transaction, which makes best use of Guernsey’s strengths as a captive domicile, and I am delighted that Guernsey continues to lead the way in longevity captive transactions.”