UPDATE 1-BMW looks at insuring UK pension liabilities

(Adds BMW statement, background)

LONDON, Feb 1 (BestGrowthStock) – German carmaker BMW’s (BMWG.DE: )
British pension fund is considering ways of covering the risk
posed by people living longer, the company said on Monday,
joining a list of companies looking to manage their pension

The schemes’ trustees “are always looking at options for
controlling and reducing the risks associated with the financing
of the scheme,” BMW said.

The Financial Times had reported the scheme wanted to insure
2.5 billion pounds ($4.1 billion) of longevity risks from the

The defined benefit pension fund had 4.4 billion pounds in
liabilities and a 584 million deficit according to its last
valuation report in April 2007.

BMW said the scheme was working towards matching its
liabilities. “Many new ideas for risk reduction and control are
considered and, where appropriate, thoroughly evaluated.”

One way of companies doing this is through longevity swaps,
under which a pension scheme can exchange the uncertainty
connected to the costs of financing pensions over a longer term
with a pre-determined stream of cash with a counterparty, which
in return takes on the longevity risk for the lifetime of the

Last May, Babcock International (BAB.L: ) became the first
British company to do such a swap deal using Credit Suisse
(CSGN.VX: ) as counterparty to hedge 500 million pounds.

According to the Financial Times, BMW is working on a deal
with Deutsche Bank (DBKGn.DE: ) and British pension insurer
Paternoster. Both parties declined to comment.

(Reporting by Susan Fenton and Cecilia Valente; Editing by
David Holmes)
($1 = 0.6147 pound)

UPDATE 1-BMW looks at insuring UK pension liabilities