5 October 2017Analysis

British Airways pension scheme selects Artex for longevity transaction

Airways Pension Scheme (APS), a retirement benefit scheme for British Airways and its associated companies, has selected Artex Risk Solutions to provide insurance management services for APS's newly established, Guernsey-based insurance company.

The insurer was established to underwrite longevity risk, which will protect APS against costs associated with potential increases in life expectancy. APS has transferred longevity risk to the insurer, which has in turn reinsured this longevity risk.

Through the use of this insurer, APS has been able to access capacity in the global re/insurance market.

The insurer was established through Guernsey's incorporated cell company legislation, providing a cost effective platform for the transaction combined with flexibility for APS in relation to any future requirements.

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. Myself and the rest of the Artex team are delighted that this has been launched successfully to provide APS with long-term longevity risk protection.”