Prudential Financial’s retirement unit -- Prudential Retirement -- recently partnered with U.K.-based Pension Insurance Corp. (PIC) to accelerate reinsurance with a unique packaging combination of assets that lowers transfer risk for small pension transactions.

Prudential and PIC test-drove this “flow reinsurance structure” over the last year, culminating in a reduction of administrative overhead and maximizing the primary insurer’s efficacy.

“This evolution in longevity risk hedging brings with it greater automation and certainty to the reinsurance of U.K. bulk annuities,” PIC's Khurram Khan said. “PIC continues to develop other such products in conjunction with enterprising reinsurers such as Prudential.”

Until now, longevity for smaller buy-in and buy-out events has proved challenging due to complicated pricing and contract administration. Having collaborated previously on many risk transfer projects, the two companies now bring this newest approach to market after two years of work.

“This approach is a win for PIC, a win for Prudential, and a win for the market,” Amy Kessler, Prudential’s head of longevity reinsurance, said. “It is a win for the market because it supports the continued growth of the small-transaction segment very effectively. It is a win for PIC because it has reinsurance capital lined up at a known price to support its fantastic work with smaller schemes. Finally, it is a win for Prudential because it helps us to efficiently reinsure a diverse and important segment of the U.K. market.”