Allen & Overy (A&O), Clifford Chance (CC) and Nabarro have scored lead roles on British defence giant BAE Systems' £3.2bn longevity swap with UK insurer Legal & General (L&G).

The deal, which is thought to mark the largest single pensions insurance transaction in the UK to date, covers the financial risk associated with 31,000 BAE pensioners.

L&G will take on 30% of the risk, with the remainder reinsured by Hannover Re.

A&O advised BAE with a team led by insurance partner Philip Jarvis, flanked by senior associate Kate McInerney. Funds partner Pavel Shevtsov acted on custody law aspects, while international capital markets partner Parya Badie provided advice on the collateral structure and partner Neil Bowden advised on pension matters.

Nabarro advised the pension trustees, fielding pensions partners Kate Richards and Ian Greenstreet, as well as head of banking Andrew McLean.

Meanwhile, CC advised L&G with financial institutions corporate chief and global insurance sector head Katherine Coates heading up the team, with support from derivatives partner Deborah Zandstra and pensions partner Clare Hoxey.

A&O's Jarvis said: "There has been a significant increase in activity in the market for pension longevity risk transfer in recent months, with more large transactions likely in the future.  

"The evolution of the market has helped employers and trustees gain confidence in the risk transfer and value for money of these transactions, while the insurers have developed a model which enables deals to be implemented within a reasonable timescale."

Both A&O and CC secured spots on BAE's legal panel in 2010. Former CC senior partner Stuart Popham has sat on Legal & General's board as a non-executive director since 2011.