November 28, 2016

Canada, Toronto, ON

Innovative, all-Canadian longevity transaction to help protect long-term viability of Canadian Bank Note pension plan.


Canadian Bank Note Company, Limited, a world leader in the design and manufacturing of anti-counterfeit documents, and The Canada Life Assurance Company, a leading Canadian insurer, today announced an agreement that strengthens the ability of Canadian Bank Note’s pension plan’s risk management strategy by transferring $35 million of longevity risk associated with just over 200 pensioners, to Canada Life. The transaction is the first streamlined longevity agreement in Canada.

Canadians can expect to enjoy longer lives than their parents and grandparents, which can make it challenging for plan sponsors to guarantee their plan members’ pension payments throughout their lifetimes. Under this new insurance agreement with Canada Life, Canadian Bank Note maintains full responsibility for the payment of monthly pensions to its pensioners, but the insurer will reimburse the pension plan should pensioners exceed life expectancy.

“Canadian Bank Note is invested in the future of our employees, and we are continuously evaluating the risks associated with our pension plans to ensure their long-term viability,” says Douglas Arends, Chairman at Canadian Bank Note. “This innovative agreement with Canada Life protects our company and our employees against the rising costs associated with increased longevity.”  

“This is an exciting development since the industry has not really seen many transactions done on this scale,” says Neil Duffy, Vice-President, Pension Risk Transfer, Canada Life. “Globally, through our reinsurance division, we have continually demonstrated our ability to write innovative longevity transactions, with one of our recent transactions being as large as €6 billion. When Canadian Bank Note approached us to help solve their longevity risk concern, it gave us the opportunity to build on our ability to innovate by developing a streamlined longevity insurance contract tailored to their needs as a smaller pension plan, opening doors for transactions of all sizes.”

“Plan sponsors are becoming more focused than ever on understanding and managing non-core business risks,” says Manuel Monteiro, Canadian Financial Strategy Group Leader at Mercer. “With continuous improvements in life expectancy, which affects pension plans of all sizes, we expect there will be further developments in the market with more longevity related insurance transactions by organizations, both large and small across Canada.” Mercer provided advice to Canadian Bank Note on the agreement.

About Canadian Bank Note
Established in 1897 to supply security-printed products to the Canadian government, the Canadian Bank Note Company (CBN) is headquartered in Ottawa, Canada and has additional plants and offices in nine other locations. CBN employs over 1,000 people worldwide and supplies products through four divisions: Lottery Systems, Identification Systems, Payment Systems and Shareholder Services. CBN is 100 per cent Canadian owned.

About Mercer
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and careers of their most vital asset – their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people.

About Canada Life
Founded in 1847, The Canada Life Assurance Company was Canada’s first domestic life insurance company. Today, Canada Life provides insurance and wealth management products and services in Canada and internationally, primarily in the United Kingdom, Isle of Man, Ireland and Germany. Canada Life, together with Great-West Life and London Life, serves the financial security needs of more than 12 million people across Canada.