LIMRA: Corporate pension buyouts soar in third quarter

U.S. corporate pension plan buyouts reached $5.9 billion in the third quarter of 2016, a LIMRA Secure Retirement Institute sales survey found.

It is the sixth consecutive quarter that activity has exceeded $1 billion in group annuity purchases and is the largest amount of third-quarter activity since 1990, according to a news release announcing the results of the survey. In the first and second quarter of this year — traditionally the quarters every year that see the least amount of activity — buyouts totaled slightly more than $1 billion each.

Transactions in the third quarter included WestRock Co.'s purchase of a group annuity contract from Prudential Insurance Co. of America. The Norcross, Ga.-based company transferred about $2.5 billion of its U.S. defined benefit plan liabilities.

Another large transaction was PPG Industries Inc., Pittsburgh, transferring a total of $1.6 billion in pension liabilities to Massachusetts Mutual Life Insurance Co. and MetLife.

`“Pension buyout activity in the third quarter jumped 80%, compared with (the) prior year,” said Michael Ericson, analyst for LIMRA Secure Retirement Institute, in the release. The third quarter of 2015 saw about $3.3 billion in buyout activity.

“Traditionally, buyout sales have experienced the largest growth in the fourth quarter. However, given the remarkable sales this quarter, third-quarter sales may be higher than fourth quarter in 2016,” he added.

For the nine months ended Sept. 30, activity totaled $8.06 billion, slightly higher than the first nine months of 2015, which saw $8 billion.

Every quarter, the LIMRA Secure Retirement Institute surveys the 13 financial services companies that provide all the group annuity contracts for the U.S. for its Group Annuity Risk Transfer Survey.