It said it made the move into captives to address rapid increases in premiums, particularly for professional indemnity cover, with some premiums doubling and trebling in recent years. The group will underwrite selected areas of cover for subsidiaries around the world.
Guernsey has also developed a niche in pensions de-risking and longevity swap transactions, primarily through the use of captive solutions.
Pacific Life Re, which manages client mortality, longevity, and morbidity risk, completed a longevity swap transaction with the trustee of the Prudential Staff Pension Scheme, covering pension liabilities of £3.7 billion relating to more than 20,000 pensioners. The deal was structured using a Guernsey-based captive insurance company, managed by Willis Towers Watson.
The swap aims to protect the scheme from the financial risk of an unexpected increase in life expectancy and to make the scheme more secure to the benefit of all its members.
Elaine Murphy, longevity director at Pacific Life Re, explained the completion and size of the deal as a "huge achievement" despite the challenges of the COVID-19 pandemic.
"This transaction demonstrates the continuing strength and capacity of the reinsurance sector to support pension scheme de-risking in a time of increased uncertainty with regards to future life expectancy."
Ian Aley, head of transactions at Willis Towers Watson, added: "We were pleased to be able to build on the trustees' in-depth understanding of this type of transaction to help them achieve attractive terms that reduce risk and enhance member security. The transaction demonstrates both the appetite of defined benefit schemes to de-risk their liabilities and how transactions can be successfully structured within the current environment."