LONDON (Reuters) - ScottishPower, a unit of Spanish energy company Iberdrola (IBE.MC), and its pension scheme trustee said on Monday that they had agreed a 2 billion pound ($3.05 billion) longevity swap deal with Abbey Life Assurance.
The deal with Abbey Life, a subsidiary of Deutsche Bank (DBKGn.DE), hedges the risk that around 9,000 scheme members and their dependants live longer than expected, the company said in a statement.
“We are extremely satisfied with the completion of this hedge at an attractive price,” said Sheila Duncan, human resources director at ScottishPower in the statement.
“We are particularly pleased that the transaction was concluded within the provisions of the scheme’s existing funding reserves, thus not requiring additional cash contributions.”
Andrew Ward, head of longevity swap consulting at Mercer, which advised ScottishPower on the deal, said future life expectancy was difficult to predict and that the deal had significantly reduced that uncertainty for the scheme.
Reporting by Simon Jessop; editing by Carolyn Cohn