12 February 2015Bermuda analysis

Artex launches pension longevity swap facility

Arthur J Gallagher's (AJG) captive management and alternative risk programmes operation, Artex Risk Solutions, has launched a new pension longevity swap facility.

Iccaria, a Guernsey domiciled Incorporated Cell Company (ICC), will allow pension funds the opportunity to transfer their longevity risk cost effectively and directly to the reinsurance market.

Developed in conjunction with PwC, it’s anticipated that pension schemes with liabilities as low as £250 million will now be able to benefit by using the Iccaria facility.

Artex said it selected Guernsey as the domicile in which to establish Iccaria because of its excellent reputation and world-class regulatory regime, essential for capital efficiency.

Paul Eaton, new business director for Artex, said: “This is an exciting time for Artex and the captive industry as we move into an era where we are able to help pension fund clients hedge their longevity risk on a cost effective basis. For many years the captive industry has been providing clients with alternative risk transfer facilities, and this is another example of innovation being used to develop a bespoke solution to meet market demand.

“Working as the insurance manager on the industry’s first pension longevity transaction to use a captive, whilst helping BT Pension Scheme establish its ICC in 2014, Artex is ideally positioned to support Iccaria. We are aware of the substantial market interest in this area and we are delighted to be working alongside PwC to offer a market-leading facility.”