Bermudian-based Pacific Life Re has entered the US longevity reinsurance market with a $3 billion transaction involving pension liabilities.

The company said it had completed the deal with American National Insurance Company, taking on the longevity risk associated with $3 billion of pension risk transfer liabilities.

The transaction marks the entry of Pacific Life Re’s Savings and Retirement business into the US market, extending a longevity reinsurance operation that already covers markets including Britain, the Netherlands and Canada.

Longevity reinsurance allows an insurer to transfer the financial risk that pensioners or other policyholders live longer than expected. For pension risk transfer business, unexpectedly long lifespans can increase the period over which retirement benefits must be paid.

Phill Beach, executive vice-president, savings and retirement at Pacific Life Re, said: “We are thrilled to achieve this milestone transaction and continue to provide longevity and asset-intensive solutions globally.

“This transaction highlights our ability to deliver tailored longevity solutions at scale and demonstrates our strong commitment to support PRT markets and policyholders worldwide.”

The deal comes as the US pension risk transfer market has grown substantially, with employers transferring pension obligations to insurers through group annuity transactions.

For reinsurers, the expansion of the market is creating opportunities to assume some of the risks subsequently held by the insurers writing those transactions.

Howie Timothy, assistant vice-president, Client Solutions, North America, Savings & Retirement at Pacific Life Re, said: “We are very proud to have partnered closely with American National on this deal and to showcase our capabilities and expertise in a new market.

“We look forward to continued partnership with the team at American National.”

Pacific Life Re said it was advised on the transaction by global law firm Eversheds Sutherland.

The reinsurer provides mortality, morbidity and longevity reinsurance as well as asset-intensive and capital solutions to insurers in Asia, Britain and Europe, Australia and North America.