Longevity Reinsurance Deal Support for a Global Reinsurer

Objective

The North American life operation of a global reinsurer was preparing its first bid in the longevity reinsurance market. Its pricing and structuring capability was in house. What it did not have was an actuary who had sat on the reinsurer’s side of a longevity treaty before, and who could review the terms and conditions the business was about to commit to: the non-binding and binding quotes, the letter of intent and, if the bid succeeded, the treaty itself.

The request reached Graeme Group with a deadline less than two weeks away and a scope described as a small number of hours. The review was to be qualitative rather than computational, concentrated on contract content, and it needed someone who could give an opinion the business could act on without an orientation period.

Two features of the brief made it unusual. The volume of work was small, so a conventional search or a consulting engagement would have been disproportionate. And the expertise was narrow: longevity reinsurance is a thin market outside the United Kingdom, and the number of actuaries who have written such treaties from the reinsurer’s chair is correspondingly small.

Scope of Work

The engagement was documented as a statement of work under the master agreement already in place between the reinsurer and Graeme Group. Two areas of support were defined:

• Qualitative review of, and written recommendations on, the terms and conditions attached to the non-binding quote, binding quote, letter of intent and treaty, with a supporting discussion where the reinsurer required one.
• General support, as requested, on the reinsurer’s response to the longevity reinsurance request for proposal.

No personally identifiable data was in scope. Materials were exchanged directly with the advisor through Graeme Group systems and deleted at the conclusion of the work.

Services Provided

Matching on Transaction Experience

The advisor placed is a US-based Fellow of the Society of Actuaries with more than three decades in life reinsurance and retrocession, including senior leadership of a global reinsurer’s retrocession business. He had personally written longevity reinsurance treaties from the reinsurer’s side and had worked through their actuarial, legal and counterparty risk aspects. He had been referred to Graeme Group by a former chief risk officer of a major Canadian insurer, and his work was known to Canadian actuaries the reinsurer could reference. Graeme Group proposed him the same day the request arrived, and the reinsurer confirmed its interest the same afternoon.

Contracting Inside an Existing Framework

The reinsurer and Graeme Group already had a master services agreement from an earlier placement. The new work was added as an appendix carrying the reinsurer’s own deliverable table and acceptance criteria, and it was signed within a week of the first request. The advisor was reviewing the quote terms before the deadline the business had set.

Staying Available as the Deal Progressed

The bid succeeded in early July. The reinsurer then asked for the advisor to remain available for treaty content and language review, and Graeme Group kept the engagement open through the drafting period rather than closing it at the end of the initial scope. The treaty draft was reviewed in September, questions were answered as they arose, and the advisor remained on call until the treaty was signed.

A Second Engagement with the Same Client

This was the reinsurer’s second use of Graeme Group. In the previous year it had engaged, through the same master agreement, a Canadian FCIA with four decades in group life, health and disability insurance to support a group insurance project the reinsurer was delivering for an insurer client, working under that client’s non-disclosure agreement. The longevity request came directly to Graeme Group because the earlier placement had established both the relationship and the contracting route.

Deliverables

The outputs of this engagement are the reinsurer’s own transaction documents. What Graeme Group provided was:

• Written reviews of, and recommendations on, the terms and conditions at each stage of the transaction: quotes, letter of intent and treaty.
• Support on the request for proposal as the reinsurer required it.
• A signed statement of work under the existing master agreement, documented to the reinsurer’s deliverable table and acceptance criteria.
• Continued availability of the advisor through the treaty drafting and execution period.

Outcome

• Bid Won: The reinsurer was successful in the tender, its first longevity reinsurance transaction in that market.
• Treaty Executed: The treaty was executed within four months of the award, and the reinsurer’s deal team wrote to the advisor to thank him for his support and attention throughout the initiative.
• Right-Sized: The engagement ran to a small number of hours across five months. The reinsurer paid for senior transaction judgment when it needed it and for nothing else.
• Market Momentum: Within weeks of the award the reinsurer had received further longevity tenders and indicated that more review work would follow.
• Repeat Client: Two placements in two years under one master agreement, spanning group insurance and longevity reinsurance, with further senior requests received since.

This engagement reflects the senior end of Graeme Group’s placement practice: transaction-experienced actuaries available for short, high-consequence work, contracted quickly inside an existing framework, and retained for as long as the deal needs them and no longer.