The British Airways Pension Scheme's recent captive insurance based longevity transaction highlights a growing appetite for such structures in the UK DB market.  Many larger schemes are looking to exploit the currently favourable pricing environment by dis-intermediating the market and building life insurance regulated structures of their own - through which access to the reinsurance markets can be facilitated.  

2014's ground-breaking structure between the British Telecom Pension Scheme (BTPS) and Prudential Financial of the US marked the beginning of this trend, re-insuring as it did £16 billion in liabilities, in a deal which hedged a quarter of the schemes (not inconsiderable) longevity risk.  BT established its own captive insurer, a Guernsey-based incorporated cell company (ICC), which granted access to the reinsurance market directly, avoiding the need for a bank or insurer to sit between the counterparties.  ICC structures are frequently arranged so that a core, capital intensive structure is created, with satelite 'cells' which can be employed should market conditions dictate at relatively short notice - thus allowing a scheme to de-risk over time as it continues to mature.

BA's recent transaction is said to represent one of a number of similar transactions forecast for the remainder of 2017...