According to the insurance company, Towers Watson Longevity Direct allows pension schemes to own a ready-made insurance cell that can write insurance and reinsurance contracts for longevity swap transactions.
By removing the need for an intermediary insurer to write the transaction, this structure significantly reduces the cost of hedging longevity risk for pension schemes.
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This structure is expected to decrease the cost of hedging longevity risk for pension schemes as it would eliminate the need for an intermediary insurer to write the transaction.
Towers Watson Risk Solutions UK head Keith Ashton said: "Access to the reinsurance market has become increasingly expensive and inefficient in recent years, but the appetite from Defined Benefit pension schemes to hedge their longevity risk has been growing strongly.
"Traditional intermediary costs can be several times higher than accessing the market directly and the aim of Longevity Direct is to provide more affordable and efficient access to the market."
According to the insurance company, pensions-de-risking transactions, longevity swaps transactions have seen a consistent increase in volume as well as value over the recent years.
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