Longevity

We offer many different solutions to transfer the longevity risk. The regular premium annuity treaty is certainly the primary solution available to pension schemes and insurance companies only wanting to transfer longevity risk, but no investment risk. A regular premium annuity treaty is a reassurance structure, which involves the client paying a pre-agreed fixed premium cash flow plus an additional fee to the reinsurer. The reinsurer in return pays the annuity payments for the remainder of the pensioners’ lives. Both payments are netted.

The reinsurer assumes both the longevity risk within a book of pensions and the related demographic risk of provisions for dependants. Regular premium annuity treaties do not, however, cover typical investment risks such as pure inflation or asset management risk.

The uncertain future pension payments are swapped against fixed known payments so that the client has planning reliability around future liabilities and can invest their assets accordingly.

Reassurance is paramount in providing risk and capital solutions. Hannover Re assists the client in structuring the reassurance treaty in a tailor-made way to optimise the capital position of its clients. This can be achieved through innovative means, for example by structuring the fee payments, and at Hannover Re we work closely together with our clients to find the right solution.

Today’s fast-changing economic and demographic environment is creating growing demand for products designed specifically for those reaching retirement. At the same time, it is becoming increasingly clear that traditional product structures do not always serve this older demographic well.

At Hannover Re, we recognise the importance of this market and the diversity of requirements. We are strongly committed to working with our clients to design new and innovative propositions which better position them to meet the needs of individuals at retirement, extend their portfolios, and contribute to a more resilient society for the future.

Our clients benefit from the leading role we have secured through pioneering new approaches in areas such as deferred annuities at retirement, unit-linked annuities, equity release reassurance solutions, parents pocket money protection, immediate needs products and underwritten annuities.

For underwritten annuities, we use medical, socio-economic, and lifestyle factors. Our state-of-the-art automated underwriting system allows for immediate guaranteed quotes and enables Hannover Re and its clients to write business on a profitable basis.

We have a dedicated team of experienced actuaries based in Hannover, with outstanding project management skills serving longevity business worldwide, who work hand in glove with our local experts equipped with extensive knowledge of the respective markets.

Our global expertise in product design, actuarial pricing and medical underwriting, and our flexibility and openness to exploring new ideas, make Hannover Re a powerful partner for any company seeking to create and maintain a competitive edge when it comes to longevity risk – be it risk transfer solutions or innovative products for an ever-growing consumer group.

The right marketing strategy and approach to consumers is crucial for the success of highly beneficial but unpopular retirement income products. Hannover Re goes beyond the role of a traditional reinsurer and also explores behavioural patterns that lead to biases, especially for annuity products. Typical misjudgements are the underestimation of one’s life expectancy and considering annuities as an investment product. Traditionally, product development is based on local market experience; however, current research on consumer behaviour is rarely taken into account. In particular, state-of-the-art economic models go way beyond the assumption of a rational consumer to model the real world more appropriately.

Over the past years, Hannover Re has held on-site seminars covering different longevity topics in a variety of countries. Recently, we have transformed these seminars into a series of longevity webinars, which we have successfully implemented in Germany, Israel and Spain, among other markets.

If you are interested to find out more, please get in touch with your local Hannover Re contact.