Oliver Wyman And Mercer Launch New Pension Risk Transfer Longevity Model
October 22, 2024
NEW YORK, October 22, 2024 – Oliver Wyman and Mercer, businesses of Marsh McLennan (NYSE: MMC), today announced the launch of a new longevity model intended for the pension risk transfer (PRT) market that will enable pension plan sponsors, direct insurers and reinsurers to better price and manage longevity risk.
The model combines the actuarial strength and longevity expertise of Oliver Wyman and Mercer and draws on Mercer's US longevity dataset that includes over one million pension lives. It incorporates socioeconomic and demographic factors to generate a granular view of longevity risk. The technology underlying the model was developed specifically to allow users to extract customized insights and analytics that help better predict, understand and effectively manage longevity risk in a PRT transaction.
The PRT market is growing rapidly. In 2023, plan sponsors and insurers completed a record number of PRT transactions – more than 800 deals for a total of $45B in premium1. That trend has continued into 2024, with transactional premium in the first half of the year increasing by 14% year-over-year2 and with Mercer’s research showing that a significant portion of plan sponsors are considering terminating their existing plans in the next 10 years.3
“Insurer participation in the PRT market has doubled over the past decade and continues to grow rapidly, with 21 insurers currently offering group annuity products designed for Defined Benefit (DB) plan buyout transactions,” said David Weinsier, a Partner and Oliver Wyman Actuarial’s Global Life & Health Leader. “This tool will allow our clients to better price and manage longevity risk in an innovative and customizable manner."
Scott Jarboe, a Partner and Mercer’s US Defined Benefit Segment Leader, said, “Many plan sponsors are driving towards terminating their DB plan, and, with more accurate data at their fingertips, they have more options that they can consider. Having a more comprehensive understanding of their plan’s longevity risk will make these transfers more attractive to insurers.”
[1] 2023 Pension Risk Transfer Sales Survey, Mercer
[2] US Group Annuity Risk Transfer Sales Survey, LIMRA
[3] 2023 CFO Survey: Next Steps in Pension Risk Management, Mercer
About Marsh McLennan
Marsh McLennan (NYSE: MMC) is a global leader in risk, strategy and people, advising clients in 130 countries across four businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman. With annual revenue of $23 billion and more than 85,000 colleagues, Marsh McLennan helps build the confidence to thrive through the power of perspective. For more information, visit marshmclennan.com, or follow on LinkedIn and X.