BBC Pension Scheme, Zurich and Metlife complete £6 billion longevity swap deal

The BBC Pension Scheme has completed a longevity swap with leading insurer Zurich Assurance Ltd (“Zurich”) and global reinsurer Metropolitan Life Insurance Company (“MetLife”) covering approximately £6 billion of pensioner liabilities representing around 21,000 members. This is the second longevity swap that the Scheme has executed with Zurich, following a £3 billion transaction in 2020.

The transaction will provide the BBC Scheme, and the BBC as sponsor, with further protection against the risk of rising costs due to members living longer than currently expected. Combined, the Scheme’s longevity transactions hedge the risk associated with nearly all of the Scheme’s pensioner and dependant liabilities.

Under the terms of the transaction, the Trustee retains future flexibility, control and security, while minimising cost, governance and operational burden through Zurich’s solution.

Aon acted as sole transaction adviser, including negotiating the intermediation terms with Zurich and broking the reinsurance with MetLife. Legal advice was provided to the Trustee by A&O Shearman, to Zurich by Slaughter and May and to MetLife by Eversheds Sutherland and Debevoise & Plimpton.

Catherine Claydon, Chair of the Scheme Trustee Board, said: “The Trustee is pleased to have further mitigated the Scheme’s exposure to longevity risk, through a second transaction on highly attractive terms for the Scheme. Many thanks to our advisers, Zurich and MetLife for achieving this important milestone."

Greg Wenzerul, Zurich’s Head of Longevity Risk Transfer, said: “We’re privileged to have partnered with the Scheme Trustee and their advisers on this important phase of their de-risking strategy. Supporting our clients through each step of their journey-planning in this manner reflects our commitment to putting customers first, an ethos Zurich applies across its broad customer base. Zurich UK’s status as a UK-regulated life insurer provides the Trustee with the highest bar of governance assurance, reinforcing confidence in long-term best practice.”

Angela Li, MetLife’s Head of UK Reinsurance, said: “MetLife is proud to support the BBC Pension Scheme in this important step of its de-risking journey. Our financial strength, expertise, and commitment to innovation enables us to deliver certainty and flexibility for pension schemes managing longevity risk. This transaction underscores our dedication to the UK market and our ability to partner on complex, large-scale longevity swaps, providing tailored solutions that meet the evolving needs of pension schemes and the broader retirement market.”

Tom Scott, Risk Settlement Partner at Aon, said: “This transaction is further evidence of the vibrant longevity insurance and reinsurance markets which continue to offer attractively priced and structured solutions in various forms to UK pension schemes, in this case in the form of a ‘longevity swap’ which means the Scheme retains investment control and flexibility.”